Inflation eases in US as prices for used cars fall
Inflation in the US cooled last month as prices for energy and used cars fell.
The consumer price index rose by 2.4% over the 12 months to January, the Department of Labor said. That was down from 2.7% in the prior month and marked the slowest pace since May.
The retreat could add fuel to arguments by US President Donald Trump and others that the central bank was in a position to cut interest rates without stoking a new flare-up in prices.
But some analysts have warned that further progress toward the Federal Reserve’s 2% target could stall in the months ahead if companies start to pass on the costs of tariffs more fully to consumers or if labour shortages push up prices for services.
For now, analysts said there were limited signs of any impact from tariffs, as prices for commodities, stripping out food and energy, held steady last month.
Neil Birrell, chief investment officer at Premier Miton Investors, said the effects of tariffs remained uncertain, and noted other data quirks that could be affecting January’s figures.
But he said the January report was 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.
The White House, which has been facing political pressure over Trump’s handling of the economy, was quick to celebrate the report, the latest to deliver good news on the state of the American economy.
The US economy was “unbelievable”, Trump told reporters at the White House on Friday, adding that “we right now have the hottest country anywhere in the world”.
Job growth last month was also stronger than expected, the Department of Labor reported earlier this week.
“President Trump has defeated Joe Biden’s inflation crisis,” the White House said in a statement, adding that the economy would “turbocharge even further” if the Federal Reserve made “long-overdue” interest rate cuts.
