Inflation slowed to start the year, offering the clearest sign in months that price pressures could be stabilizing, but sustaining that momentum may be more cha
Joshua Leyva, Best Buy sales advisor, packages up a customers purchase at Best Buy on December 23, 2025 in Miami, Florida. Photo by Joe Raedle/Getty Images) Inflation slowed to start the year, offering the clearest sign in months that price pressures could be stabilizing, but sustaining that momentum may be more challenging for an economy still dealing with stubborn costs and lingering tariff effects.
January marked a productive start in the effort to bring down inflation, which is now stretching into a sixth year above the Federal Reserve’s 2% target.annually, the slowest annual increase since last May. The “core” measure that removes volatile food and energy categories was steady at 2.5%, the slowest annual increase since March 2021. It was a rare sign of progress for households under strain after prices climbed by 25% since the post-pandemic economic recovery, but there are still several variables at play that could influence the trajectory of price increases moving forward. Price increases from tariffs have not been as steep as initially feared after many of them were unwound or implemented at lower rates than first announced, but companies are still facing decisions on whether to pass increased production costs onto consumers. Many were hesitant to hit customers already stretching budgets with further price increases and opted to instead build stockpiles or eat the costs. Robert Crockett and his son, Robert Crockett Jr. shop for last minute gifts to buy at a Best Buy store on December 23, 2025 in Miami, Florida. While most economists expect tariff-induced price increases to be a one-time cost effect and not a sustained inflationary pressure, they add to what has become a years-long struggle to fully eliminate the last effects of the post-pandemic bump. It’s also unclear whether the effects of the tariffs have entirely worked through the economy with global supply chains. “The trouble is that most of what America imports is inputs for other goods, which means that those tariffs can take time to work their way through supply chains. If a steel tariff goes up, it can take months or years before that will work its way into the price of a new washing machine or a new construction project,” said Ryan Young, senior economist at the Competitive Enterprise Institute. A recent Federal Reserve Bank of New York study found 90% of the costs of President Donald Trump’s 2025 tariffs are being paid by U.S. companies and consumers. Companies were able to avoid passing them on last year, but some are running out of means to offset costs and are readjusting in 2026. Tariff-sensitive products like furniture and household appliances continued their upward trend in January. Furniture rose by 0.3% in January, appliances climbed 1.3% and apparel also grew 0.3%. The record-length shutdown last year interrupted data collection for the inflation survey, which economists say may have pushed January’s inflation reading lower. Data was unable to be collected during October and was delayed in November, when holiday discounts pulled prices lower and may have skewed the readings. Some additional clarity on the inflation front will come as more economic data like the producer price index and the personal consumption expenditures index, the Fed’s preferred measure, are released over the next several weeks. Fed officials will get another month of inflation and employment data before their March meeting but are still expected to hold steady on adjusting the benchmark rate. Policymakers will want to see more sustained progress on inflation that has been above target for years before cutting rates while the economy is growing and unemployment is low. Higher rates help fight inflation by making it more expensive to borrow money. Officials are trying to keep rates at a “neutral” level that does not support or hamper growth in hopes of striking a balance keeping the unemployment rate low while tamping down inflation. The U.S. economy grew at a healthy pace in the middle two quarters of 2024 and is expected to continue that trend when the fourth quarter data is released later this week. Job creation slowed significantly, marking the slowest year for hiring since 2020, but employers have avoided widespread layoffs that have “There are cracks all around, but the foundation is holding, and the more that foundation holds, the less the Fed will see a need to cut interest rates, which is good news for inflation,” Young said. Chicago Fed President Austan Goolsbee told CNBC on Tuesday that more cuts could be approved this year, but that is contingent on inflation continuing to move toward the 2% target. He also warned that services inflation is “not tamed” and poses a risk to further progress. Service prices have been sticky and climbed in January, rising at the fastest monthly clip in a year. Categories like airfares, entertainment, medical care and housing were elevated to start the year. Services inflation can be harder to bring down because labor costs and wages generally do not move downward after an increase, unlike goods that can fluctuate."I think we've been basically stalled out around 3% with some positive signs, but also some warning signs," Goolsbee said.SAN ANTONIO - Texas drivers who don’t pay toll road charges can risk having their driver’s licenses suspended, their car registrations blocked or even facing aSAN ANTONIO - A teen is fighting for his life after being shot in the chest.Around 7:55 p.m. on Sunday, police were called to the scene of a reported shpotingCONVERSE, Texas - Judson Middle School will officially close after the Judson Independent School District Board of Trustees unanimously voted to shut down the cUPDATE AT 9:10 AM - A two-month-old boy, who was in custody at Dilley Detention Center, was taken to the hospital Monday night.Sources say the child was treate
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