Inflation fell three-tenths of a percentage point to 2.4% for the year ending in January, the Bureau of Labor Statistics reported Friday in an update to the consumer price index that brings relief for President Donald Trump, who has been haunted by persistent inflation.
Forecasters had expected inflation to drop from 2.7% to 2.5%.
The drop in inflation could lift political prospects for Trump, whose economic approval ratings have fallen dramatically because of discontent with high prices. Easing price pressures could give him more breathing room to carry out his tariff agenda.
Core inflation, a measure that strips out volatile food and energy prices, fell one-tenth of a percentage point to 2.5% for the year ending in January. That is the lowest core inflation since March 2021.
In January alone, prices rose 0.2%.
There has been some price relief on key food items.
For instance, in the past year, the price of fresh whole chicken has fallen 1.3%. Egg prices, which were high last January thanks to an outbreak of the avian flu, are down more than 30%. And cheese prices have fallen 1.2% since this time last year. Some fruit and vegetable prices, such as those for potatoes and tomatoes, have also posted declines.
Still, some items in the CPI bundle are more expensive than a year ago.
Ground beef prices increased by more than 17%. Uncooked beef roasts are up 15% and steaks cost nearly 13% more.
Coffee prices have also ballooned 18.3% over the past year.
Electricity prices have been difficult for households as demand has soared on the grid. Electricity prices have gone up 6.3% in the past year. Households are saving on fuel, though, as prices for gasoline are down 7.5% on the year.
“With headline inflation drifting closer to 2% but core inflation still firm, the economy appears to be in a ‘slow glide’ toward price stability rather than a sharp drop,” Bankrate financial analyst Stephen Kates said. “Paired with the surprisingly strong jobs report earlier this week, recent data suggests the Federal Reserve has room to be patient with future rate cuts.”
This latest inflation report comes after the Federal Reserve voted to hold interest rates steady last month, ending a streak of three straight meetings at which it cut interest rates.
The Fed faces a dilemma. On the one hand, signs of a slowdown in the labor market weigh in favor of lowering interest rates to spur greater borrowing and spending. On the other hand, inflation is still running above the Fed’s 2% target. Meanwhile, the White House is pressuring the central bank to cut rates.
The Fed’s next meeting is set for mid-March, and it will get a few more inflation reports, as well as February’s employment report, to digest before it makes its decision on whether to continue holding its rate target at a range of 3.50% to 3.75%.
Earlier this week, the latest jobs numbers came in stronger than expected, despite downward revisions to past employment reports.
The economy added 130,000 jobs in January, and the unemployment rate ticked down a tenth of a percentage point to 4.3%, the Bureau of Labor Statistics said Wednesday.
Still, a revision to the past year’s data showed that payroll employment was 1 million lower at the end of 2025 than previously thought. Average monthly payroll growth for 2025 was revised down from roughly 50,000 to 15,000.
PAYROLL JOBS NUMBERS REVISED DOWN BY OVER A MILLION FOR 2025
Trump and Republicans have been working to highlight the positive spots in the economy, such as positive jobs growth and unexpectedly hotter economic growth. Despite that, voters continue to report dissatisfaction with prices and affordability.
Democrats are trying to capitalize on that dissatisfaction in order to wrest back control of one or both chambers of Congress in the midterm elections in November. If they are able to win control, it could hamstring the administration during the second half of Trump’s second term.
