Inflation in the U.S. eased to a near five-year low in January, with consumer prices rising 2.4% year-over-year and core prices, excluding food and energy, up 2.5%, driven by slower rent growth and falling gas prices.

Monthly increases were modest, with used car prices dropping 1.8% and gas falling 3.2%, while some items like airline fares, furniture, and appliances saw sharper rises.

Housing costs, which make up about a third of the inflation index, grew slowly, with rents rising 2.8% from a year ago, much lower than post-pandemic peaks.

Tariffs on imported goods have increased costs for some companies, but delays, exemptions, and weaker consumer spending have limited broad-based price hikes, the AP has reported.

The cooling inflation could give the Federal Reserve room to cut interest rates later this year, as wage growth remains slow and Americans continue to feel the impact of high borrowing costs.