The US Bureau of Labor Statistics just released the January 2026 Consumer Price Index, and inflation came in lower than expected. Consumer prices rose 2.4% on an annual basis, below the 2.5% that economists surveyed by Bloomberg had forecast. The monthly increase was 0.2%, again below the expected 0.3%.
Core CPI, which excludes food and energy, came in at 2.5% year-over-year, matching forecasts. This is a clear improvement from December’s numbers, where headline inflation sat at 2.7% and core at 2.6%.
The report was delayed due to the brief government shutdown earlier this month.
Bitcoin is currently trading at $67,210, up 0.26% in the past hour. Ethereum is at $1,968, up 0.48%. The full price impact remains to be seen.
What This Means for the Fed and Crypto Markets
Bitcoin has been reacting sharply to inflation data in recent months. The reason is straightforward. CPI shapes expectations around Federal Reserve rate cuts, and rate expectations directly affect liquidity in markets.
When December’s hotter CPI print came in, Bitcoin dropped between 5% and 8%. A softer reading in November supported a 2% to 3% rebound in BTC. This pattern shows how closely crypto tracks these reports now.
Before today’s release, CME FedWatch showed a 90.3% chance that the Fed would hold rates steady at its next meeting. A cooler print like this one could push rate cut expectations forward, but the Fed does not meet again until March.
Worth noting, the US has now gone six straight years with inflation above the Fed’s 2% target. One better month does not change that.
Food Prices and Jobs Data Add to the Picture
Not everything is improving. Food prices rose 2.9% year-over-year in January, with coffee and beef driving much of that increase.
On the jobs side, data released earlier this week showed the US added just 181,000 jobs across 2025.
Nicole Bachaud, an economist, said, “The 181,000 jobs that were added across 2025 really starkly show how challenging the labor market was and how little movement on either side there really has been.”
The softer CPI gives the Fed more room, but with sticky food prices and a slow labor market, the bigger picture is still mixed. Bitcoin traders will be watching closely over the next few hours.
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