The January 2026 CPI report dropped today (Feb 13), and it's a step closer to the Fed's 2% target. Headline CPI came in at 2.5% year-over-year (down from 2.7% in Dec 2025), matching consensus forecasts. Core CPI (excluding food & energy) also eased to 2.5% YoY from 2.6%, signaling moderating underlying pressures.
Monthly, both headline and core rose 0.3%, in line with expectations. Shelter costs continue as a key driver, but goods prices show some stabilization despite tariff talks lingering in the background. Energy moderated, helping pull the headline lower.
This print reinforces the "soft landing" narrative: inflation cooling without derailing growth. After a stubborn 2025 where core hovered in the high-2s/low-3s, we're now firmly trending toward target. Markets are pricing in potential Fed rate cuts by summer if this trend holds—no aggressive easing yet, but the door's opening.
Key takeaway: Persistent but declining inflation. Tariffs or supply shocks could reheat things, but for now, this is progress. Investors, watch shelter and services for the next releases—those will dictate the pace.
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