US inflation cools to 2.4% in January
The US Consumer Price Index for January 2026 rose 2.4% year-over-year, the lowest reading in nearly five years and below the 2.5% forecast. The moderation was driven by falling gas prices and cooling housing costs. Core inflation remains persistent, however, with a 0.3% monthly price increase suggesting ongoing caution.
- While the headline inflation rate cooled, core inflation saw a 0.3% monthly increase, with notable persistence in the services sector. Year-over-year, core CPI eased slightly to 2.5%, its lowest since March 2021, but transportation services and shelter costs continued to be primary drivers of this underlying inflation. - In its late January meeting, the Federal Reserve held its benchmark interest rate steady at a range of 3.5% to 3.75%. The committee's statement noted that while economic activity is solid, inflation remains "somewhat elevated," and they will continue to monitor a wide range of data before considering any adjustments to interest rates. - Despite the positive inflation report, major stock indexes, including the S&P 500 and Nasdaq, fell, partly due to concerns over AI's disruptive impact on various sectors. Tech stocks, in particular, experienced a sell-off as investors are increasingly differentiating between companies that are clear beneficiaries of AI and those whose business models may be threatened. - For the shipping and logistics industry, cost pressures remain a central concern even as broader inflation moderates. While demand in the Asia-to-US air cargo market has been weak, rising global oil prices in January pointed to an increase in transportation costs. - Enterprise IT spending is projected to see significant growth in 2026, with some forecasts predicting a 10.8% increase to $6.15 trillion. This spending is increasingly focused on production-scale AI deployments, security, and cloud infrastructure, shifting from purely experimental projects to those that can demonstrate a clear return on investment. - Specific components driving the monthly core inflation increase included a 6.5% surge in airline fares and a 1.2% rise in personal care costs. Conversely, prices for used cars and trucks fell by 1.8%, and motor vehicle insurance decreased by 0.4%. - The New York Federal Reserve's January Survey of Consumer Expectations indicated a decline in short-term inflation expectations, with the median one-year-ahead expectation falling to 3.1%. However, expectations for rent increases and the cost of medical care remain elevated. - Analysts note that while goods inflation has largely normalized, the "stickiness" of services inflation presents a challenge. This persistence is leading some to believe that a sustained 3% inflation environment could be the norm through 2026, requiring businesses to focus on pricing discipline and supply-chain diversification.
