U.S. Inflation Cools, Exceeding Economists’ Expectations

Inflation cooled to its lowest level in several months to begin the year, surprising some economists, the Labor Department announced Friday.

Inflation unexpectedly eased to 2.4% in January, compared to the same month in 2025 when it was at 2.7%, The New York Times (NYT) reported, citing the Bureau of Labor Statistics’ (BLS) change in Consumer Price Index (CPI) metric. “Core” inflation, which is measured on a year-over-year basis and filters out food and energy prices, lowered to 2.5% from 2.6%.

Some economists surveyed by The Wall Street Journal had expected an inflation rate of 2.5%. The 2.4% inflation rate is the lowest since May 2025, according to the BLS, a unit of the Labor Department.

The new data comes after the BLS’ January jobs report also exceeded expectations — with 130,000 positions added for the month and the unemployment rate ticking down to 4.3%.

Food prices rose slightly in January, and energy prices fell 1.5% alongside car insurance rates, according to then NYT. Housing costs rose 0.2% in January and the rental cost of owned housing was up 3.3% from the same time in 2025.

The lower rates come as uncertainty over tariffs mounts in Congress over the impact they are having on consumer prices, local businesses and farmers. Nearly 90% of economic costs associated with tariffs have fallen on U.S. businesses and their customers, according to a Thursday study by the Federal Reserve Bank of New York.