US inflation cools more than expected, kindling hopes of Fed rate cut
The consumer price index rose 2.4 per cent year-on-year, the lowest level since May, though affordability concerns still weigh on households
Consumer inflation in the US cooled slightly more than expected in January, government data showed Friday, as energy prices dipped.
Analysts say the figure allows the Federal Reserve to cut interest rates again later this year, but warn that policymakers need to see sustained improvement to do so – despite US President Donald Trump’s insistence that there is virtually no inflation.
The consumer price index (CPI) rose 2.4 per cent year-on-year, the Department of Labour said, down from December’s 2.7 per cent and slightly below analysts’ median forecast. This was the lowest level since May 2025.
The White House swiftly lauded the report, with deputy press secretary Kush Desai saying it proves that Trump “has defeated” an uptick in inflation that took place under his predecessor Joe Biden.
Yet, affordability worries have come to the fore in recent months as price increases in areas like food weighed on households, and as Trump’s tariffs flowed through the world’s biggest economy.
Although tariffs have not triggered a broad inflation surge, firms have reported higher business costs. Many companies, however, tried to soften the blow by stocking up on inventory ahead of planned levy hikes and avoided passing on additional costs in full to consumers.