The U.S. Bureau of Labor Statistics released its inflation report
for January 2026 on February 13th.
Big News for our subscribers (at least we’re excited about it):
We are in the process of a massive update for the site. We’ve already updated the Cumulative Inflation Calculator and made the tables easier to navigate. They collapse, so it is easier to scroll past them and continue on with the article. They are also searchable, reversible, and just plain easier to read. We’ve consolidated some pages, so there is less jumping around, and we are adding a table of contents to the page so you don’t need to scroll so much, just jump to the right section. We also got rid of a bunch of ads, so the pages aren’t so cluttered. We are currently working on the Historical Steampunk calculator that calculates annual inflation all the way back to 1774, and hope to have it back up soon. Check out our Current Inflation page or Annual Inflation. And let us know what you think! We’d love to get your feedback. ~ Tim McMahon, editor.
Now Back to the Inflation News.
The BLS reported Annual Inflation at 2.4%, down from 2.7%. But when we look at it to 2 decimal places, we see it fell from 2.68% to 2.39%.
- CPI Index rose from 324.054 to 325.252
- Monthly Inflation for January 2026 was 0.37% down from 0.65% in January 2025.
- Next release March 11th, 2026
Annual Inflation Table
| Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec | |
| 2026 | 2.39% | |||||||||||
| 2025 | 3.00% | 2.82% | 2.39% | 2.31% | 2.35% | 2.67% | 2.70% | 2.92% | 3.01% | NA | 2.74% | 2.68% |
| 2024 | 3.09% | 3.15% | 3.48% | 3.36% | 3.27% | 2.97% | 2.89% | 2.53% | 2.44% | 2.60% | 2.75% | 2.89% |
| 2023 | 6.41% | 6.04% | 4.98% | 4.93% | 4.05% | 2.97% | 3.18% | 3.67% | 3.70% | 3.24% | 3.14% | 3.35% |
BLS Commentary:
“The index for all items less food and energy rose 0.3 percent in January. Indexes that increased over the month include airline fares, personal care, recreation, medical care, and communication. The indexes for used cars and trucks, household furnishings and operations, and motor vehicle insurance were among the major indexes that decreased in January… The index for energy decreased 1.5 percent in January. The gasoline index decreased 3.2 percent over the month. (Before seasonal adjustment, gasoline prices decreased 2.5 percent in January.) The index for electricity declined 0.1 percent in January. In contrast, the natural gas index increased 1.0 percent over the same period.”
Although inflation is down from the June 2022 peak of 9.06%, but even moderate inflation can rapidly erode purchasing power and create uncertainty as businesses have more difficulty estimating future costs.
Factors Driving Current Inflation
- The primary factor driving today’s inflation is still the residual effects of the massive money printing during and post-COVID.
- The FED followed a loose monetary policy for too long before reducing assets and raising interest rates.
- Initially, supply shortages during COVID spiked inflation, but now services are experiencing more price increases than commodities.
BLS Inflation Components:
Looking at “Table A” below, we can see that on an annual basis, energy commodities like gasoline are still down, but Utilities are up fairly significantly, with Natural Gas (called “Utility Piped Gas”) up the most. On an Annual Basis, Gasoline is down -7.5%, but Natural Gas is up 9.8%.
January 2026 FED Summary:
At its January 2026 meeting, the FED held rates steady at the 3.5% to 3.75% range set in December, citing that the economy’s outlook “has clearly improved since the last meeting”. In 2025, the FED Lowered FED Funds Rate 3 Times and shifted from Quantitative Tightening to a form of Quantitative Easing (aka. QE-Lite). This involves buying short-term Treasury bills to ensure ample bank reserves). While not formally labeled “quantitative easing,” many analysts and market participants refer to this type of ongoing, small-scale liquidity support as “QE Lite.” This is considered to be “Open-ended, ongoing as a balance-sheet management tool” rather than an emergency stimulus. The Fed’s December 2025 asset-policy shifts were designed to make its late-2025 rate cuts actually work by restoring sufficient liquidity to money markets—loosening technical conditions without launching full quantitative easing. Despite Quantitative Tightening, i.e., selling FED assets, the FED continued to increase the M2 money supply. M2 Money supply is rising. The FED Funds Rate was 3.72% in December. Currently, it is holding steady at 3.64%. Source: fred M2
For more see: FED Monetary Policy and Inflation.
Quantitative Policy
The Fed officially ended its quantitative tightening (QT) program that has been in place since 2022. Effective December 1, 2025, the FED is no longer shrinking its balance sheet.
Then, on December 10, 2025, the Fed announced “Reserve Management Purchases” (RMPs) (aka. QE-Lite):
- Roughly $40B in T-bill purchases in the first month
- All principal payments reinvested into T-bills
- Authorization for more short-maturity purchases as needed
The FED hopes that these inflationary forces will counteract a tightening Job market and the deflationary effects of AI but they reported it as simply increasing bank liquidity.
FED Assets
After peaking in October 2025, the Global money supply fell in November and moved sideways for a while, but it is moving up sharply again.
FED Funds Rate
The FED Funds rate fell to 3.64% after being as high as 5.33% a little over a year earlier.
1 Year MIP Inflation Prediction vs. Actual:
Our prediction from a month ago almost perfectly nailed January’s median projection.
Go here to view our current MIP projection.
Inflation Chart
Monthly Inflation Compared to Previous Years:
The monthly inflation rate for January 2026 was 0.37% compared to 0.65% a year ago.
See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.
Misery Index
Unemployment 4.30% + Inflation 2.39% = 6.69%
This month, inflation is down, as is unemployment, and so the misery index is down from 7.08% to 6.69%. For the first half of 2024, the Misery index hovered around 7% before falling to the high 6s. It finished the year at 6.99% and moved up very slightly to 7.00% in January 2025.
Read More on the Misery Index…
Rate of Change
The NYSE ROC chart generated a BUY signal in January.
The NASDAQ ROC generated a BUY signal back in September.
Both BTC and ETH have generated Sell Signals. BTC in August, about a month prior to the all-time high. ETH generated a sell signal in November.
For more information, see: Crypto ROC.
Here are some articles you might enjoy in case you missed them:
From InflationData.com
Read more on UnemploymentData.com.
From Financial Trend Forecaster
From Elliott Wave University
From OptioMoney
From Your Family Finances
- YFF has a new editor, so we won’t be posting new links anymore.
Read more on InflationData.com.
