Arielle Ingrassia, associate director and investment specialist at Evelyn Partners, notes that softer-than-expected US CPI data, with headline inflation at 2.4% year-on-year and core at 2.5%, reinforces a gradual disinflation trend, though persistent services pressures are likely to keep the Federal Reserve cautious on the timing of rate cuts.
Arielle Ingrassia, Associate Director, Investment Specialist at Evelyn Partners, the UK wealth manager, commented:
“January’s US CPI report was softer than expected – a 0.2% monthly uptick and 2.4% YoY headline, with core easing to 2.5% YoY. This extends a recent run of softer inflation prints and was notable given January releases are structurally prone to appearing firm. Beginning-of-year price resets, refreshed seasonal factors and updated CPI weights can amplify reported MoM moves, particularly across services categories such as airfares and recreation. That the print still undershot expectations reinforces the view that underlying price momentum is gradually cooling.
“The broader message remains one of disinflation, though composition matters more than the headline. Core goods prices continue to stabilise, reflecting normalised supply chains and fading goods-price pressures. Core services – especially shelter – remain stickier. Services inflation is moderating, but not yet decisively at levels consistent with a sustained return to 2%.
“For markets and policy, this reflects an improving trend rather than a one-off surprise. A sequence of softer releases strengthens the case that inflation is moving in the right direction, but it does not eliminate the Fed’s caution. Policymakers are likely to seek clearer evidence that services inflation is durably cooling before signalling rate cuts. In short, the trajectory supports eventual easing, but the persistence of services pressures reinforces a gradual, patient approach – keeping markets attentive to the pace of services disinflation rather than extrapolating near-term policy shifts.”
