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 some analysts have 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 or labour shortages push up prices for services.

For now, analysts said there were limited signs of any impact from tariffs, as prices for commodities, stripping out food and energy, held steady last month. 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.

The White House, which has been facing political pressure over Trump's handling of the economy, was quick to celebrate the report, the latest to deliver good news on the state of the US economy. Job growth last month was also stronger than expected, the Labor Department reported earlier this week. "President Trump has defeated Joe Biden's inflation crisis," the White House said in a statement, adding that the economy would "turbocharge even further" if the Fed made "long-overdue" interest rate cuts. (BBC)