US inflation falls to 2.4% in January after Trump's tariffs led to price fluctuations

• Monthly prices rose 0.2% from December to January, with core CPI (excluding food and energy) increasing 0.3% over the month
• The Federal Reserve held off on a rate cut in January and remains uncertain about March, with Fed Chair Powell expecting tariff effects to peak and then decline throughout 2025
• Trump's approval rating fell to 37% in February polling, with inflation being his lowest-rated issue despite campaign promises to tackle high prices

Summary: US Inflation Falls to 2.4% in January

Key Data Points:

• US inflation declined to 2.4% annually in January, below economists' expectations of 2.5%
• Monthly CPI rose 0.2% from December to January
• Core CPI (excluding food and energy) increased 0.3% month-over-month
• 2025 job additions totaled 181,000, significantly down from 2 million in 2024 after revisions

Market Context:

Inflation has been volatile over the past year, reaching a low of 2.3% in April before climbing to 3% by September, then moderating to 2.7% by year-end. The fluctuations have been partly attributed to Trump administration tariffs working through the economy.

Federal Reserve Implications:

The Federal Reserve passed on an interest rate cut in January, with its next meeting scheduled for March. Fed Chair Powell expects tariffs to cause a one-time price increase before stabilizing, with effects "peaking and then starting to come down" throughout the year. The central bank is monitoring both inflation and labor market conditions.

Political Impact:

Trump's approval rating has fallen to 37% in February polling—his lowest across both terms—with inflation being his weakest issue among voters. This presents challenges for Republicans heading into midterm elections, despite Trump's campaign promises to address high prices. The White House has recently unveiled initiatives targeting housing prices, credit card debt, and drug costs in response to growing voter concerns about affordability.

Market Watch:

Wall Street is closely monitoring inflation data to gauge potential Fed interest rate movements and economic direction.