Inflation eased slightly in January but remained well above the Fed’s target

This story on the January 2026 CPI inflation report is developing and will be updated with more details.

Inflation remained elevated in January as the pace of consumer price growth stayed above the Federal Reserve’s target rate as policymakers weigh affordability concerns.

The Bureau of Labor Statistics on Friday said that the consumer price index (CPI) – a broad measure of how much everyday goods like gasoline, groceries and rent cost – rose 0.2% on a monthly basis in January and trended down to 2.4% on a year-over-year basis. That was down slightly from 2.7% in December.

Expectations vs. reality

Both figures were slightly cooler than the expectations of economists polled by LSEG, who predicted a 0.3% monthly gain and 2.5% increase from a year ago.

So-called core prices, which exclude volatile measurements of gasoline and food to better assess price growth trends, were up 0.3% from the prior month and slowed to 2.5% from a year ago from a reading of 2.6% last month. Those figures were in line with economists’ expectations.

Economists have noted that inflation data from December 2025 through April 2026 will be affected due to data collection interruptions resulting from last fall’s 43-day government shutdown. 

Due to the shutdown, the BLS wasn’t able to gather data and used a carry-forward methodology to make up for the lack of an October CPI report and missing data in November’s report. Going forward, economists say that is likely to impart a downward bias on inflation data until this spring, when fresh data will negate the discrepancy.

The cost of living breakdown

High inflation has created severe financial pressures in recent years for most U.S. households, which are forced to pay more for everyday necessities like food and rent. Price hikes are particularly difficult for lower-income Americans, because they tend to spend more of their already-stretched paychecks on necessities and have less flexibility to save.

Food prices increased 0.2% in January and are 2.9% higher than a year ago. The food at home index was up 0.2% for the month and is 2.1% higher than last year, while the food away from home index rose 0.1% in January and is 4% higher than a year ago.

Meats, poultry and fish prices rose 0.7% in January and were 7% higher than a year ago. Beef and veal prices declined 0.4% in the month but are up 15% from last year. Egg prices continued to decline following an avian flu outbreak that impacted supply, with prices down 7% for the month and 34.2% year-over-year. The fruits and vegetables index was down 0.6% on a monthly basis and is up just 0.2% from last year.

Expert analysis