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. <\/p>\n
After inflation declined from a 2025 high of 3% in September to 2.7% in December<\/a>, the most closely watched indicator in the report \u2014 which was delayed by a brief shutdown \u2014 will be the direction of the overall inflation rate.<\/p>\n 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. <\/p>\n But while just one month isn\u2019t 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.<\/p>\n It could also validate the Trump administration’s decision late last year to roll back tariffs<\/a> 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. <\/p>\n In just the past few weeks, the administration has altered tariffs on India<\/a> and Bangladesh. Those agreements lowered tariffs<\/a> on \u201ccertain textile and apparel goods\u201d from Bangladesh to zero and broadly cut tariffs on imports from India to 18% from 25%. <\/p>\n Late Thursday, U.S. Trade Representative Jamieson Greer announced the signing of a reciprocal trade agreement with Taiwan<\/a> that should mean tariffs are lowered on many of the island’s exports to the United States.<\/p>\n Despite the deals, however, most analysts and economists expect to see inflation increase in Friday’s report.<\/p>\n \u201cThe CPI report is expected to show relatively elevated inflationary pressures,\u201d said Soci\u00e9t\u00e9 G\u00e9n\u00e9rale chief U.S. economist Jan Groen. \u201cWe expect both the headline and the core indices to have gone up at somewhat firm paces.\u201d<\/p>\n Wells Fargo\u2019s 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%. <\/p>\n \u201cA solid rise in January is unlikely to be entirely a statistical mirage,\u201d Wells Fargo\u2019s economists wrote in a note this week. \u201cRather, 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.\u201d<\/p>\n Analysts at Goldman Sachs also anticipate a jump in core inflation and expect the report to attribute price increases in part to \u201cstart of the year price resets in categories like medical care commodities\u201d and \u201cupward pressure from tariffs.\u201d <\/p>\n 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. <\/p>\n