Inflation eases in US as prices for used cars fall

Inflation in the US cooled last month, as prices for energy and used cars dropped.

The consumer price index rose 2.4% over the 12 months to January, the Labor Department said. That was down from 2.7% in the prior month and marked the slowest pace since May.

The retreat could add fuel to arguments by US President Donald Trump and others that the central bank is in a position to cut interest rates, without stoking a new flare up in prices.

But analysts warned that further progress toward the Federal Reserve's 2% target could stall in the months ahead, if companies start to pass on the costs of tariffs more fully to consumers.

Neil Birrell, chief investment officer at Premier Miton Investors, said the effects of tariffs remained uncertain, and noted other data quirks that could be affecting January's figures.

But he said the January report was likely to "ease the path towards a cut in rates sooner rather than later".

"The US economy looks to be in fine fettle with growth strong, inflation stable, the job market looking firmer and a Fed that has room to manoeuvre," he added.