U.S. Inflation slows in January 2026, lowest level since May 2025
U.S. annual inflation rate slowed in January, 2026 to 2.4 percent year-over-year from 2.7 percent the month prior, marking its lowest level since May, 2025 as energy prices push lower. Also driving the headline figure were lower gasoline prices and fuel. Meanwhile, monthly CPI rose a mere 0.2 percent, marking the slowest monthly pace in recent months. Cooler inflation keeps expectations of a rate cut intact, which supports equities. Looking ahead, the Fed has room to ease monetary policy if disinflation persists and bond yields ideally should push lower amid softer inflation, also benefiting stocks.
The Figures
Key takeaways of the report is that gasoline tumbled 7.5 percent y/y which pulled the headline figure lower and that the prices of shelter (falling from 3.2% to 3.0%) is slowly starting to come back to reality – worth noting that it is still the largest weighted category. Breakdown of the report below: 
Source: Source: U.S. Bureau of Labor Statistics, February 13, 2026
Prepared by Sigmanomics.com
Market Forecasts
SPX Weekly Chart 
Source: Sigmanomics.com/stock-markets
Taking a look at the S&P 500 (SPX) weekly chart, the index has stalled at the 78.6 percent Fibonacci extension on the recent upswing. With bearish RSI deepening, there is potential for a short-term correction; however, we do not rule out another push higher towards equal legs in the 7300 area to squeeze out early shorts before a larger correction in the medium to long term.
EUR/USD Weekly Chart
Source: https://sigmanomics.com/forex-markets/eurusd
In the forex market, EUR/USD is at the crossroads, trading at key weekly trend line resistance that was formed in 2018. This junction not only represents trend line resistance, but also coincides with equal legs from a Elliott wave theory perspective. While price action stays below this level, market participants should not rule out a pullback towards 1.12. Should occur, options traders will view this as a range bound oppotunity of with swing high bias as the overall greenback theme medium to long term remains bearish.
Conclusion
Traders should continue to keep an eye on the economic calendar for macro developments and not get too comfortable as the real question is whether this holds as consumers are likely to witness the spillover of tariff costs in the coming months. Key indicators to watch going forward will be the PCE Price Index, which is the Fed’s preferred gauge, Employment cost index, weekly jobless claims, and ISM manufacturing. Also worth keeping a close eye on are household goods due to the fact that new trade policies filter through supply chains.
Sam Bourgi, Analyst
Sam Bourgi is an analyst, writer and financial market commentator featured in and cited by U.S. Congress, Department of Justice, Chicago Board Options Exchange, Barron's and Forbes. He covers stocks, bonds, mutual funds, ETFs, forex, Bitcoin, cryptocurrency, real estate and macroeconomics. He has written over 25,000 articles and over 40 whitepapers and e-books.
