The U.S. Bureau of Labor Statistics (BLS) released the highly anticipated Consumer Price Index (CPI) report on Friday, February 13, 2026, revealing that annual inflation cooled more than expected to start the year. The headline inflation rate fell to 2.4% for the 12 months ending in January, down from 2.7% in December, marking an eight-month low and signaling a significant shift in the economic landscape.
Key Findings from the January 2026 CPI Report
On a monthly basis, the Consumer Price Index rose by 0.2% in January, a slight deceleration from the 0.3% increase recorded in December. This figure came in below the 0.3% forecast by many Dow Jones economists. The data suggests that the Federal Reserve’s efforts to stabilize the economy are gaining traction as price pressures ease across several sectors.
- Headline CPI: 2.4% annually (down from 2.7% in December).
- Core CPI: 2.5% annually (the lowest reading since March 2021).
- Monthly Increase: 0.2% for all urban consumers.
- Energy and Goods: Significant price drops in used cars (-1.8%) and gasoline (-3.2%) helped pull the headline number down.
Core Inflation Hits 5-Year Low
The “core” CPI, which excludes the volatile food and energy categories, rose 2.5% over the last 12 months. This is a critical metric for policymakers as it provides a clearer view of long-term inflation trends. The 2.5% mark represents the smallest year-on-year rise in core prices since 2021, providing a boost of confidence for markets and consumers alike.
While the overall trend is downward, some economists remain cautious. Public sentiment on platforms like Reddit suggests that while “physical goods” are deflating, service-related costs and housing remain points of concern for many American households. Approximately one-third of the CPI is currently being imputed, a factor some analysts say could influence the perceived accuracy of the data.
What is the Consumer Price Index?
The Consumer Price Index (CPI) is the primary measure of inflation in the United States. It tracks the average change over time in the prices paid by urban consumers for a “market basket” of consumer goods and services, including food, clothing, shelter, fuels, transportation fares, and medical care. The BLS uses this data to adjust Social Security payments, tax brackets, and other economic indicators.
Market Reaction and Economic Outlook
Wall Street responded positively to the news, with many analysts suggesting that the “soft landing”—a scenario where inflation returns to the Fed’s 2% target without triggering a recession—is now officially within reach. However, some independent economists warn that prices could remain volatile throughout 2026, depending on global supply chain stability and domestic labor market conditions.
The next CPI update is scheduled for release in mid-March, which will provide further insight into whether this cooling trend will persist through the first quarter of the year.