US inflation eased in January easing some worries about the impact of President Donald Trump’s tariffs on consumer prices, and bolstering the case for the Federal Reserve to hold interest rates steady.
The fall was aided by the cooling prices of gasoline, eggs, and beef, but rising costs for consumer goods like apparel, computers, and airfares suggest tariffs are still squeezing household budgets.
While the report was an encouraging sign for the inflation outlook, economists and policymakers are worried the impact of tariffs hasn’t fully materialized: “Everyone believes that tariffs are going to have a transitory effect on inflation, but the question of when those tariff effects fade is going to be more of a second-half-of-the-year story than a first-half-of-the-year story,” one analyst told The Wall Street Journal.