Pace of Annual Inflation Slowed to 2.4% in January

Matt Grossman

Fri, February 13, 2026 at 10:36 PM GMT+9 3 min read

Several companies have said they are reducing some of their grocery prices. - Lucía Vázquez for WSJ

Consumer prices rose 2.4% in January from a year earlier, cooler than the 2.7% recorded in December, the Labor Department said Friday.

Economists surveyed by The Wall Street Journal had expected inflation of 2.5%.

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Core prices, which exclude volatile food and energy items, rose 2.5% in January from a year earlier. Economists also expected those prices to rise 2.5%.

The latest annual number had some help, since a high inflation reading from January 2025 has now dropped out of the past 12 months of data. Month over month from December, consumer prices in January rose a seasonally adjusted 0.2% and core prices rose 0.3%.

The January inflation release comes two days after a report of better-than-expected jobs growth last month and a decrease in the unemployment rate to 4.3%.

Despite the good news, the Federal Reserve has a delicate task ahead in the final months of Jerome Powell’s eight-year tenure as chair. The central bank aims to keep inflation at a 2% annual pace, but has missed that target for about five years. Fed officials are still trying to strike a careful balance: leaning against inflation without bruising the labor market.

Aggressive interest-rate hikes punctured the blistering price increases that slammed the economy in 2022. But as inflation receded and the job market cooled, the Fed shifted gears, voting through nearly 2 percentage points of rate cuts since the summer of 2024 before pausing in January.

Friday’s inflation report was pushed back slightly after the recent partial government shutdown disrupted operations at the Labor Department. The much-longer shutdown this past fall was an unprecedented obstacle for the government’s system for collecting price data, which might bend inflation numbers lower for months to come. Economists have said they believe missing data on housing-cost increases in October has artificially depressed estimates of how much those prices rose last year. That problem doesn’t affect more-recent month-over-month inflation numbers.

Inflation has cooled significantly since the annual rate briefly topped 9% in mid-2022. Yet elevated price increases have lingered, wearing down shoppers and frustrating policymakers.

Consumers have consistently cited high prices as one of their top concerns in recent surveys. Grievances with inflation on the Biden administration’s watch helped pave President Trump’s path back to the White House. Affordability is shaping up to be a prime campaign issue for both parties in this year’s congressional races.

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Many economists have penciled in lower inflation in 2026, as indications mount that price pressures are abating. Companies such as PepsiCo and General Mills have said they are reducing some of their grocery prices to entice budget-conscious consumers, a sign that demand might now be too tepid for businesses to pass along higher costs.

Evidence from surveys and from financial markets suggests that neither consumers nor investors are preoccupied with the risk of inflation surging anew. This is reassuring, since people expecting higher prices might speed up purchases or press harder for raises, which can make inflation expectations self-fulfilling.

Write to Matt Grossman at matt.grossman@wsj.com

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