United States: Inflation falls in January
Latest reading: Consumer inflation cooled to 2.4% in January 2026, marking the lowest pace since last May. This was down from 2.7% the preceding month and came in under market expectations. Much of the slowdown stems from base effects, as last year’s stronger readings have now dropped out of the annual comparison.
Energy costs were a major driver of the moderation. Overall energy prices slipped 0.1% after rising 2.3% in December, with gasoline declining sharply (-7.5% versus -3.4%) and fuel oil reversing from a prior surge (-4.2% after +7.4%). Natural gas still increased, though at a slightly reduced rate (9.8% compared with 10.8%).
On a month-to-month basis, CPI rose 0.2%, softer than December’s 0.3% gain and below expectations of 0.3%. Core inflation also edged down, reaching 2.5% annually—its lowest level since March 2021—slightly below the previous month’s 2.6% and in line with forecasts.
Panelist insight: On the outlook, TD Economics’ Thomas Feltmate said:
“We expect some firming in inflationary pressures over the coming months, as businesses continue to pass on increasingly more of the tariff cost. There’s also a risk of a stronger demand-side push on inflation, as OBBBA 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.”