Friday will round out a busy week of data on the U.S. economy, with the January Consumer Price Index report set to be released at 8:30 a.m. ET.
After inflation declined from a 2025 high of 3% in September to 2.7% in December, the most closely watched indicator in the report — which was delayed by a brief shutdown — will be the direction of the overall inflation rate.
Many economists said that the historically long government shutdown in the fall could have caused the December inflation rate to have been artificially low, because less data was collected during the lapse in funding, and that holiday sales may have further skewed prices lower.
But while just one month isn’t a trend, a decline in the inflation rate in January could offer a glimmer of hope to consumers who have grappled for years with a rising cost of living.
It could also validate the Trump administration’s decision late last year to roll back tariffs on dozens of food items. The administration has also continued to reach trade deal frameworks with countries that it says will lead directly to lower tariffs.
In just the past few weeks, the administration has altered tariffs on India and Bangladesh. Those agreements lowered tariffs on “certain textile and apparel goods” from Bangladesh to zero and broadly cut tariffs on imports from India to 18% from 25%.
Late Thursday, U.S. Trade Representative Jamieson Greer announced the signing of a reciprocal trade agreement with Taiwan that should mean tariffs are lowered on many of the island’s exports to the United States.
Despite the deals, however, most analysts and economists expect to see inflation increase in Friday’s report.
“The CPI report is expected to show relatively elevated inflationary pressures,” said Société Générale chief U.S. economist Jan Groen. “We expect both the headline and the core indices to have gone up at somewhat firm paces.”
Wells Fargo’s U.S. economics team agreed. It expects core inflation (which excludes volatile food and energy prices) to rise 0.33% month over month, higher than the 12-month average of 0.22%.
“A solid rise in January is unlikely to be entirely a statistical mirage,” Wells Fargo’s economists wrote in a note this week. “Rather, we believe it will reflect some delayed pass-through of tariff costs to consumers as suppliers renegotiate contracts, businesses restock inventory and companies test pricing power.”
Analysts at Goldman Sachs also anticipate a jump in core inflation and expect the report to attribute price increases in part to “start of the year price resets in categories like medical care commodities” and “upward pressure from tariffs.”
Broadly, economists surveyed by Dow Jones expect inflation overall to have risen by 0.3% in January from December. On an annual rate, the expectation is that inflation will fall to a 2.5% annual rate.
The report will come just two days after the delayed January jobs report, which looked positive for the month but included major revisions to recent hiring data that painted a gloomier picture.
Preliminary data had indicated that the U.S. economy added 584,000 jobs in 2025. But the Bureau of Labor Statistics revised the number down Wednesday to just 181,000 jobs.
The Federal Reserve has for months been balancing its two mandates — stable prices and full employment — on what some experts have described as a knife’s edge.
Friday’s inflation data could tip the balance.
“CPI data since September has surprised to the downside of consensus expectations, but Fed officials and market participants have been hesitant to draw many conclusions from the months that have been impacted by measurement issues related to the government shutdown,” Citigroup economist Veronica Clark wrote last week.
But even before the CPI release, Wall Street wasn’t expecting any Fed interest rate cuts until late summer at the earliest.
“Based on my forecast, we could be on hold for quite some time,” Federal Reserve Bank of Cleveland President Beth Hammack said Tuesday.
Hammack expects inflation to ease as the year progresses, but currently, she says, “inflation is still too high.”
