U.S. inflation eased in January, with the consumer price index (CPI) up 2.4% year over year, down from 2.7% in December, according to the Bureau of Labor Statistics. The reading came in below expectations and showed a broad-based slowdown across several everyday categories such as food and gasoline.

Why markets care: Inflation trends feed directly into expectations for Federal Reserve policy. Cooler inflation can support equities by lowering the perceived need for restrictive interest rates, while stubborn pockets of price pressure can keep yields elevated and weigh on rate-sensitive stocks.

Tariffs and immigration policy in focus: Economists cited by CNBC said Trump administration tariff actions have added upward pressure on prices as companies pass some import costs through to consumers. Reduced labor supply linked to immigration policy can also raise service-sector prices.

A key caveat: Analysts also noted a statistical distortion stemming from the federal government shutdown in the fall. With limited price collection in October, the BLS assumed flat prices for many categories, potentially making inflation look better on paper than underlying conditions. Moody's chief economist Mark Zandi estimated inflation might be closer to 2.7% if that missing data were incorporated.

Where prices are moving: January data showed gasoline down about 7.5% from a year earlier and lower month over month, while utility gas service was up about 10% annually. Food inflation remained near 2.9% year over year — still high by historical standards.

What's next: Investors will watch upcoming inflation prints, wage data and policy developments around tariffs for clues on the timing and pace of any Fed rate cuts — and what that means for equity valuations and sector leadership.