US inflation dropped to 2.4% in January after last year’s tariff-driven price swings. Prices rose 0.2% from December, while core inflation increased 0.3%. Economists had expected a slightly higher annual rate. Inflation had fallen to 2.3% in April, climbed to 3% by September, and eased to 2.7% at year’s end.
The White House called the new figure proof that its economic agenda is working and rejected claims that tariffs caused lasting price spikes. Officials argued that stable inflation will allow interest rate cuts and faster growth. Investors now watch the data for signals from the Federal Reserve, which paused rate cuts in January and will decide again in March. Fed chair Jerome Powell said tariff effects should raise prices only once before fading later this year.
The labor market remained solid in January, but revised data showed much weaker job growth for 2025 than for 2024. Trump highlighted GDP growth and past price stability, yet new polls showed falling approval, especially on inflation. These numbers create pressure for Republicans before the midterm elections. The administration has recently proposed measures to reduce housing costs, credit card debt, and drug prices.
