After years of pain at the grocery store, at the gas pump, and in the housing market, the latest data suggest the tide may finally be turning. And critics who predicted that President Donald Trump’s trade policies would send prices spiraling are suddenly very quiet.
According to the Bureau of Labor Statistics, the consumer price index rose 2.4% compared to a year ago in January. That is a notable drop from December and the lowest annual inflation reading since May 2025. Economists had braced for a hotter number. Instead, they got relief.
Strip out food and energy, and the so called core inflation rate came in at 2.5% year over year. That matched forecasts. On a monthly basis, overall prices increased 0.2%, while core prices rose 0.3%. Again, slightly better than expected.
Markets reacted instantly. Treasury yields fell. Traders quickly recalibrated their expectations. The CME Group FedWatch tool showed the probability of a June rate cut jumping to roughly 83%. Wall Street is now openly betting that the Federal Reserve could soon pivot toward easier money.
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