– The Washington Times
Consumer prices grew at a 2.4% pace in January, falling slightly below Wall Street predictions and providing ammunition for President Trump to argue that his policies have lowered living costs for Americans.
Friday’s data gives consumers hope that America’s pesky inflation problem could be starting to ease. The inflation rate dropped to where it was in May, the month after Mr. Trump’s April 2025 announcement of steep tariffs on virtually all of America’s trading partners.
It also brings inflation back to the 2.5% range, which was the average between 2017 and 2019, during Mr. Trump’s first administration and prior to the COVID pandemic, which contributed to soaring prices.
The data, released by the Labor Department, is a widely cited inflation gauge that measures a broad number of goods and services across the U.S. economy. A Dow Jones consensus expected prices to increase by 2.5% compared to January 2025.
The cost of goods in January was lower than it was in December 2025 when prices grew by 2.7% compared to the previous year. Prices have been on a downward trajectory since peaking just above 3% in September.
Excluding volatile food and energy, the core Consumer Price Index stood at 2.5%, a tick below the 2.6% growth in December. It was forecast to increase by 0.3% in January, again beating analyst predictions.
In a major spot of good news, shelter costs, which include housing and rentals, rose by just 0.2%, lowering the annual increase to 3%.
Energy prices declined by 1.5%, the cost of new vehicles increased by just 0.1%, and the cost of used cars and trucks fell by 1.8%.
The report also revealed that private sector workers’ earnings increased over inflation by $1.400 last year.
January is the third straight month in which the CPI has come in below Wall Street expectations. That should give the Federal Reserve Bank’s policymakers more confidence that they can lower interest rates without risking another inflation burst.
However, the Fed does not use CPI as its primary inflation measure. Instead, it more closely follows the Commerce Department’s Personal Consumption Expenditures Price Index, which will be released on Feb. 20. Typically, the Fed looks to have inflation around 2% before lowering interest rates.
• Jeff Mordock can be reached at jmordock@washingtontimes.com.
