January U.S. consumer inflation accelerated at its slowest pace in eight months and trailed expectations — both overall and in core categories.

Figures released Feb. 13 by the Labor Department showed that its Consumer Price Index topline reading rose 0.2% month-over-month and 2.4% year-over-year. 

That trailed economists’ consensus expectations of 0.3% and 2.5%, respectively, and were below December’s marks of 0.3%/2.7%.

In January’s subindexes, food increased 0.2%/2.9% and energy moved -1.5%/-0.1%.

Core inflation — which removes volatile food and energy categories — increased 0.3% month-over-month and 2.5% year-over-year, compared to 0.2%/2.6% in December. Both figures were in line with expectations, and the YoY figure was its lowest since March 2021.

January’s Producer Price Index figures are set to be reported Feb. 27.

December PPI Rises Sharply as Machinery Wholesalers Expand Margins

Interest Rate Context

The slower-than-expected January consumer inflation figures — along with employment edging down to 4.3% (from 4.4%) may give the Federal Reserve more confidence toward cutting its benchmark interest rate when it meets on March 17-18.