Inflation slowed in January, but the picture is still complicated for markets watching the Federal Reserve’s next move.

## What the report showed

CNBC summarized the Bureau of Labor Statistics’ January CPI release as follows:

- **Headline CPI:** **+2.4% year over year** (down from **2.7%** in December)

- Economists noted easing price pressures across some staples like **gasoline** and parts of **food**, while several “necessities” categories remained stubbornly higher.

## Why investors care

Equity and bond markets tend to react to inflation surprises because they can shift:

- Expectations for **Fed rate cuts/holds**

- The trajectory of **Treasury yields**

- Earnings and valuation assumptions, especially for rate-sensitive sectors

Oxford Economics’ Bernard Yaros said one data point alone likely doesn’t change the baseline expectation for policy, with the Fed still expected to stay on hold until mid-year.

## The two big caveats highlighted

CNBC reported that economists pointed to:

1. **Policy effects**: tariffs and immigration policy may be adding upward pressure to prices as businesses pass costs through and labor supply tightens in some services.

2. **A data distortion**: a federal shutdown disrupted inflation data collection, leading the BLS to assume no increases for many categories in a month where data was missing — which can make inflation look better “on paper.”

## Key price moves mentioned

- **Gasoline**: down month-over-month and down year-over-year

- **Food inflation**: still elevated (CNBC cited **2.9%** annual food inflation)

- **Utilities/home heating**: categories like utility gas service were cited as notably higher (CNBC cited **~10%** annual increase for utility gas service)

## What to watch next

- Any changes in **tariff policy** (including court decisions) that could affect the inflation outlook

- Upcoming inflation and labor-market prints that could validate (or reverse) the cooling trend

_Source: CNBC (link above). Topic: stock-markets._