#USCoreCPIHitsFour-YearLow BREAKING: US Core CPI Hits Four-Year Low, Inflation Pressures Ease Significantly 🔥

Latest data shows the US January core Consumer Price Index (CPI) rose just 2.5% year-over-year, marking its lowest level since early 2021! Headline CPI also slowed to 2.4% , coming in below expectations. This signals a key turning point in the high inflation that has plagued the US economy for years.

📊 Data Highlights:

Core CPI: +2.5% YoY (vs 2.6% previous) — weakest in four years

Headline CPI: +2.4% YoY (vs 2.7% previous) — lowest since May 2025

Monthly Figures: Headline CPI rose just 0.2%, Core CPI up 0.3%

🔍 Reasons for the Cooldown:
A 1.5% drop in gasoline prices and a 1.8% decline in used car prices were major contributors. Notably, shelter costs, which carry significant weight in the CPI, rose only 0.2% month-over-month, with the annual increase slowing to 3% , indicating housing inflation is fading. However, airfare prices surged 6.5% in a single month, becoming the sole "hot spot."

💡 Impact on Markets:

1️⃣ Fed Policy Expectations Heat Up
Market expectations for rate cuts this year have intensified — traders now price in a total cut of approximately 63 basis points for 2026, equivalent to more than two rate cuts. A PIMCO economist noted: "The Fed should feel more comfortable in its decision-making on rate cuts."

2️⃣ Bond Market Reacts Positively
Treasury prices rose, pushing the 10-year yield toward the 4% threshold, while the 2-year yield approached its lowest level since 2022.

3️⃣ Ripple Effects Across Asset Classes

Dollar: Likely to soften modestly, which could benefit commodities and emerging markets

Risk Assets: Typically benefit from a slowing inflation environment

Gold/Silver: Spiked briefly following the data release

⚠️ Warning Signs to Watch:
Despite the overall positive trend, prices for goods like furniture (up 0.7%), household appliances (up 1.3%), and clothing (up 0.3%) continued to rise, suggesting the pass-through effects of the Trump administration's tariff policies are still present. Economists caution: "We wouldn't want to rule out potential price pressures, especially as trade patterns are normalizing."