January Consumer Inflation Cools; Core CPI Hits Nearly 5-Year Low

10:32 AM EST, 02/13/2026 (MT Newswires) -- US consumer inflation eased last month, with core price growth marking the slowest pace in nearly five years, Bureau of Labor Statistics data showed Friday.

The consumer price index rose 0.2% in January, compared with a Bloomberg-polled consensus that called for the month-on-month pace to remain unchanged at 0.3%.

Annually, inflation cooled to 2.4% last month from December's 2.7%, reflecting the smallest increase since May and coming in below Wall Street's 2.5% projection.

Core inflation, which excludes the volatile food and energy components, accelerated in line with expectations to 0.3% last month from 0.2% in December. The annual core measure eased to 2.5% -- the smallest annual increase since March 2021 -- from 2.6%, also as expected.

"Although measured CPI inflation is somewhat understated because of October's shutdown-related distortions, it seems to be moving in the right direction -- toward the 2% target -- as both tariff effects and labor market pressures subside," Sal Guatieri, senior economist at BMO Capital Markets, said in a report.

Energy prices turned negative both sequentially and on an annual basis, official data showed. Monthly food price growth slowed to 0.2% in January from 0.7% in December, while the annual increase eased to 2.9% from 3.1%.

Markets widely expect the Federal Reserve to keep its benchmark lending rate steady for the second consecutive policy meeting in March, according to the CME FedWatch tool. Prior to last month's pause, it delivered three back-to-back 25-basis-point rate cuts amid concerns about the labor market.

"Still, the (Federal Open Market Committee) will likely seek further confirmation that inflation is making sustained progress before resuming rate cuts, likely this summer," Guatieri said.

On Wednesday, Kansas City Fed President Jeffrey Schmid said monetary policy should remain "somewhat restrictive" to cool inflation as he cautioned against cutting interest rates further.

On Tuesday, Dallas Fed President Lorie Logan said the current monetary policy is well positioned to respond to risks to inflation and the labor market, adding that she's more concerned about prices remaining "stubbornly high."

"We expect some firming in inflationary pressures over the coming months, as businesses continue to pass on increasingly more of the tariff cost," Thomas Feltmate, senior economist at TD Economics, said in a report. "There's also a risk of a stronger demand-side push on inflation, as (One Big Beautiful Bill Act) tax cuts, easier financial conditions, and a stabilizing labor market provide tailwinds to consumer spending."

"It's for this reason that we think that the Fed will stay on the sidelines until at least the summer."

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