USA CPI Report: January 2026 - Inflation Cools to 2.4%
The Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) report for January 2026 on February 13 (delayed from Feb 11 due to the partial government shutdown). Here's a breakdown of the key numbers and how they compare to January 2025.
Headline Overview
| Indicator | Jan 2025 | Jan 2026 | Change (pp) |
|---|
| Headline CPI (YoY) | 3.0% | 2.4% | -0.6 |
| Core CPI (excl. Food & Energy, YoY) | 3.3% | 2.5% | -0.8 |
| CPI Index Level | 317.671 | 325.252 | +7.581 |
| MoM Change (SA) | +0.5% | +0.2% | -0.3 |
| Core MoM (SA) | — | +0.3% | — |
Key takeaway: Headline inflation dropped to 2.4%, its lowest since May 2025, beating expectations of 2.5%. Core CPI fell to 2.5% — the lowest since March 2021. Both readings came in below forecasts, boosting hopes for Fed rate cuts later this year.
⚠️ Data caveat: The fall 2025 government shutdown (Oct 1 – Nov 12) disrupted BLS data collection. The missing October data and incomplete November data may impart a downward bias on inflation readings through approximately April 2026. Moody's estimates the "true" rate may be closer to 2.7%.
Key Sector Inflation (Year-on-Year)
| Sector | Jan 2025 | Jan 2026 | Change (pp) |
|---|
| Food (overall) | 2.5% | 2.9% | +0.4 🔴 |
| — Food at Home (groceries) | — | 2.1% | — |
| — Food Away from Home | — | 4.0% | — |
| Shelter | 4.6% | 3.0% | -1.6 ⬇️ |
| Energy (overall) | +1.0% | -0.1% | -1.1 ⬇️ |
| — Gasoline | — | -7.5% | — |
| — Electricity | — | +6.3% | — |
| — Natural Gas | — | +9.8% | — |
| Core (excl. Food & Energy) | 3.3% | 2.5% | -0.8 ⬇️ |
| Medical Care | — | +3.2% | — |
| Household Furnishings & Ops | — | +3.9% | — |
| Personal Care | — | +5.4% | — |
| Recreation | — | +2.5% | — |
| Transportation Services | — | +1.3% | — |
⬇️ Shelter — the largest single CPI component (~36% of basket) — decelerated sharply from 4.6% to 3.0%, the lowest since January 2022. This is the single biggest driver of the improving inflation picture.
⬇️ Gasoline fell 7.5% YoY, dragging overall energy into negative territory for the first time in months.
🔴 Food ticked higher to 2.9%, driven by restaurant meals (+4.0%) and specific items like beef (~15% YoY) and coffee (~18% YoY) due to supply constraints. Egg prices fell 7% in January after a dramatic surge, and are now down 34% from their peak.
Monthly Highlights (January 2026 MoM, Seasonally Adjusted)
| Category | MoM Change |
|---|
| All Items | +0.2% |
| Shelter | +0.2% |
| Food | +0.2% |
| Energy | -1.5% |
| Airline Fares | +6.5% |
| Used Cars & Trucks | -1.8% |
| Hospital Services | +0.9% |
| Motor Vehicle Insurance | -0.4% |
| Eggs | -7.0% |
Tariff Impact
Despite widespread expectations that Trump's tariffs (announced April 2025) would broadly spike inflation, the impact has been concentrated in select goods rather than creating broad-based price pressure. Categories like furniture and appliances have seen clear tariff effects, while most essential household budget items have been cooling.
Fed Policy Outlook
| Indicator | Current |
|---|
| Fed Funds Rate | 4.25–4.50% (held steady Jan 2026) |
| Next expected cut | June 2026 (market consensus) |
| 2025 rate cuts | 3 × 25bp cuts in H2 2025 |
| Fed's 2% target | Still above, but converging |
The Fed is widely expected to remain on hold until June 2026. The softer-than-expected January print supports the case for eventual cuts, but officials remain cautious given labor market weakness (only ~15,000 jobs/month added in 2025) and lingering tariff uncertainty.
Context
The January report was released on a Friday (Feb 13) instead of the usual Tuesday/Wednesday schedule due to the government shutdown disruption.
Nonfarm payrolls have been extremely weak — just 15,000/month in 2025 — raising stagflation concerns.
Consumer spending held up relatively well in 2025, though it was unexpectedly flat heading into the holiday season.
The Fed's preferred gauge (PCE price index) will provide additional clarity when the December reading is released later this month.
Source: U.S. Bureau of Labor Statistics, Consumer Price Index — January 2026 (released Feb 13, 2026)
