Jan 2026 CPI Cooler Than Expected at 2.4% Annual; Fed May Hold March Rate

The January 2026 Consumer Price Index (CPI) fell to 2.4% annualized, below forecasts of 2.5%, its lowest level in nine months. Core inflation, excluding volatile food and energy, rose 2.5% year-over-year. Food prices eased 2.1% YoY, with fresh fruit, eggs down 34%, while ground beef and roasted coffee rose 17%. Energy prices slowed, led by a 7.5% drop in gasoline, though electricity climbed 6.3% amid rising demand. Housing costs rose 3% YoY, down from 3.2% in December, but softness may reflect data gaps from the October 2025 shutdown. The Federal Reserve is likely to keep its benchmark rate unchanged at the March 15-16 meeting, despite inflation edging closer to its 2% target. PCE, the Fed’s preferred gauge, remains near 3%, and officials will closely monitor labor market stability. Oxford Economics forecasts two rate cuts in 2026, at June and September meetings.