US Inflation Slows as Used Car and Energy Prices Decline

Inflation in the United States eased in January, helped by falling costs for energy and used vehicles, offering encouraging signs for economic stability.

New data from the Labor Department showed the Consumer Price Index rose by 2.4% over the 12 months to January — down from 2.7% the previous month and marking the slowest pace of price growth since May.

The moderation in inflation is likely to strengthen arguments from President Donald Trump and others that the Federal Reserve may be able to reduce interest rates without reigniting price pressures.

While the latest figures point to steady progress toward the Fed’s 2% inflation target, analysts caution that the path ahead may not be entirely smooth. Some warn that inflation could stabilise or even edge higher if businesses begin passing on tariff-related costs to consumers, or if labour shortages push up service prices.

For now, however, there are few indications that tariffs are having a broad impact. Core commodity prices — excluding food and energy — remained largely unchanged during the month, suggesting underlying price pressures are contained.

Neil Birrell, chief investment officer at Premier Miton Investors, noted that while the longer-term effects of tariffs remain uncertain, January’s data may contain statistical quirks that influenced the outcome.

Even so, he said the report is likely to “ease the path towards a cut in rates sooner rather than later”.

“The US economy looks to be in fine fettle with growth strong, inflation stable, the job market looking firmer and a Fed that has room to manoeuvre,” he added.