Inflation Cools in January, Offering Relief for Consumers

Price increases slowed, with the annual inflation rate dropping to 2.4%.

Published on Feb. 13, 2026

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Inflation rose just 0.2% in January from December and fell to 2.4% on an annual basis, both less than anticipated. This is good news for Americans who have grappled with rising costs of living. The Federal Reserve held interest rates steady as it seeks to balance the labor market and persistent inflation.

Why it matters

Slowing inflation provides some relief for consumers who have faced an affordability crisis due to rising prices. It also gives the Federal Reserve more flexibility as it tries to navigate the competing forces of a strong job market and high inflation.

The details

The price of housing and food at home were the largest factors in the January increase, while energy prices saw a 1.5% drop. Core inflation, which strips out volatile categories, was also in line with expectations. However, some tariffs are starting to impact consumer prices, with sharp increases seen in appliances, electronics, and other goods.

  • Inflation rose 0.2% in January 2026 from December 2025.
  • Annual inflation fell to 2.4% in January 2026.

The players

Federal Reserve

The central banking system of the United States that sets monetary policy, including interest rates.

Beth Hammack

President of the Federal Reserve Bank of Cleveland, who expects inflation to ease as the year progresses but says it is still too high.

Donald Trump

The former President of the United States who implemented sweeping tariffs that have impacted consumer prices.

Andy Jassy

CEO of Amazon, who said the company is starting to see the impact of tariffs as sellers pass on higher costs to consumers.

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What’s next

The Federal Reserve will continue to monitor inflation and economic conditions as it determines future monetary policy decisions.

The takeaway

Slowing inflation provides some relief for consumers, but the impact of tariffs and the Federal Reserve's balancing act between price stability and full employment remain key challenges.