US inflation rose less than expected in January as CPI rose just 0.2%, but core inflation showed signs of strengthening, reflecting price increases earlier in the year and the possible impact of tariffs.
The annual inflation rate slowed to 2.4% from 2.7% in December, largely due to base effects as last year’s high readings were no longer included in the calculation.
Core CPI, which excludes food and energy, rose 0.3%, continuing a pattern in which January readings often beat expectations due to seasonal adjustments.
At the same time, the labor market has shown stability with job growth picking up and the unemployment rate falling to 4.3%, supporting the view that the economy remains resilient.
The Federal Reserve kept interest rates at 3.50%-3.75% last month, and the combination of moderate inflation and a stable labor market is likely to allow the central bank to maintain that stance in the near term.
However, economists expect inflation to rise temporarily this year due to the passing-on of tariff costs and the impact of the trade-weighted US dollar depreciation of 7.4% last year.
