Inflation measure drops to a nearly five-year low

Core Insights - A key measure of inflation fell to 2.4% in January, down from 2.7% in December, nearing the Federal Reserve's 2% target [1] - Core prices, excluding food and energy, rose 2.5% in January, the smallest increase since March 2021, down from 2.6% the previous month [1] - Consumer prices increased by 0.2% in January compared to December, while core prices rose by 0.3% [1] Inflation Trends - The decline in inflation is attributed to slower apartment rental price growth and falling gas prices, providing some relief to consumers [1] - Despite the recent cooling, consumer prices remain approximately 25% higher than five years ago, keeping affordability a significant political issue [1] - A notable drop in used car prices, which fell 1.8% in January from December, contributed to the moderation in core inflation [1] Retail Impact - Retailers are passing on some costs from tariffs on goods like furniture, appliances, and clothing, although these increases are offset by price drops in other areas [1] - Furniture prices increased by 0.7% in January and are up 4% year-over-year, while appliances rose 1.3% in January, showing only slight increases compared to the previous year [1] - Clothing prices rose 0.3% in January and have increased by 1.7% over the past year [1]