Inflation has eased more than anticipated since the beginning of the year, offering some relief to American families still grappling with elevated prices that have persisted since the Biden administration encountered the highest inflation levels in four decades.
In January, the consumer price index increased by 0.2% compared to December. In relation to the start of 2025, prices have gone up by 2.4%.
When Trump assumed office, inflation stood at an annual rate of 3%.
Economists had predicted a 0.3% rise in prices last month and a 2.5% increase over the preceding year.
Core consumer prices, which strip out food and energy, climbed 0.3% in January. Over the last twelve months, core prices saw a 2.5% increase. Both of these figures aligned with expectations, marking the lowest annual core inflation since March 2021, shortly before a significant surge in inflation under Biden.
Recent economic metrics have outperformed projections. The Labor Department reported this week that economic growth added 130,000 jobs in January, more than doubling economists’ estimates, and the unemployment rate dipped to 4.3%. Wage growth was also up, at 3.7% year-on-year.
Prices for goods excluding food and energy remained unchanged from December. When compared to last year, core products only increased by 1.1%.
Gas prices dropped by 3.2% in January and were down 7.5% from the previous year. Electricity prices slightly decreased by 0.1%, experiencing an annual rise of 6.3%.
Pharmaceutical prices fell by 0.1%, and prescription drug prices remained stable. Compared to last year, prescription drug prices decreased by 0.7%, which aligns with a critical promise made during Trump’s administration.
Used car prices went down by 1.8%, marking the second month in a row of declining prices, with a 2% drop from January last year. New car prices were steady in December, with a marginal rise of 0.1%. Prices for cars and trucks increased by only 0.4% compared to last year. Auto insurance costs decreased by 0.4%.
Major home appliances saw a price decline of 0.7%, but they increased by 2% year-on-year. Prices for washers and dryers increased by 2.6%, slightly reversing a 4.1% drop from December. Yet, over the year, laundry equipment prices have decreased by 0.3%.
Food prices have only risen by 0.2%, marking a slowing rate of food inflation from the previous month. Year-on-year, food prices have increased by 2.1%. Beef prices, which soared last year, fell by 0.4%, translating to a 15% rise over the year. Egg prices saw a 7% drop, with a significant 34.2% decrease compared to the previous year.
Prices at restaurants remained unchanged during the month, while a comprehensive measure of food outside the home rose by 0.1%.
The shelter index, covering rent and homeownership expenses, experienced a 0.2% increase, indicating a moderate inflation rate.
Most of January’s inflation originated from the core services sector, which saw a 0.4% rise in the headline index. Prices for core services rose by 2.9% year-on-year.
