#USCoreCPIHitsFour-YearLow

📉 US Core CPI Hits Four-Year Low: What This Means for Crypto & The Fed

The latest U.S. inflation data is out, and it’s making waves across global markets. The Core Consumer Price Index (CPI) has dropped to its lowest level in four years, and here at Gate Square, we’re breaking down exactly what this means for you—whether you’re a trader, a long-term holder, or just getting started in crypto. 🧵👇

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📊 The Numbers: What Happened?

On February 13, 2026, the U.S. Bureau of Labor Statistics released the January inflation report. The headline figures surprised to the downside, signaling a continued cooling of the economy.

Metric Actual (Jan 2026) Forecast Previous (Dec 2025)
Headline CPI (YoY) 2.4% 2.5% 2.7%
Core CPI (YoY) 2.5% 2.5% 2.6%
Headline CPI (MoM) 0.2% 0.3% 0.3%
Core CPI (MoM) 0.3% 0.3% 0.2%

Key Insight: The Core CPI—which excludes volatile food and energy prices—fell to 2.5% year-over-year, its lowest level since March 2021. That’s a four-year low. 📉

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🏠 Why Did Inflation Drop? The "Good" News

Let’s look at what actually drove this decline. Two major categories showed significant relief:

🔹 1. Energy Prices Tumbled

The energy index fell 1.5% in January alone. Why?

· Gasoline prices dropped 3.2% for the month.
· This marks the first meaningful decline in energy costs in months, giving consumers a breather at the pump. ⛽

🔹 2. Shelter Costs Finally Cooled

Housing is the largest component of CPI, and for the first time in years, it’s showing signs of moderation.

· The shelter index rose only 0.2% in January—half the pace seen in December.
· This slowdown had a direct and significant impact on the overall inflation reading. 🏡

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⚠️ Where Is Inflation Still Hiding? The "Sticky" News

Not everything is cooling down. Some categories are still running hot, and they’re worth watching closely:

· Services Inflation (Ex-Energy): Rose 0.4% in January—the fastest pace since July. This suggests underlying pressure in the service sector remains.
· Airline Fares: Spiked 6.5% in January, contributing heavily to the monthly core increase. ✈️
· Food at Home: Grocery prices are still climbing. Cereals and bakery products jumped 1.2% last month. 🍞

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🏦 What This Means for the Federal Reserve

The Fed has been walking a tightrope between controlling inflation and avoiding a recession. This report gives them more room to maneuver.

📉 Rate Cut Expectations Are Rising

Following the data release, traders immediately increased bets on Fed rate cuts:

· Probability of a rate cut by June jumped to over 70%.
· Markets are now pricing in three possible rate cuts by the end of 2026. 📆

🎯 Closing in on the 2% Target

The Fed’s long-term inflation target is 2% (based on the PCE index, not CPI). While CPI and PCE differ, this trend is a strong signal that monetary policy is working.

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🧠 Why This Matters for Crypto

Now let’s talk about what really matters to this community: How does this impact Bitcoin, Ethereum, and the broader crypto market?

✅ 1. Liquidity Injection Expected

Lower inflation + rate cuts = more liquidity in the financial system. Historically, crypto thrives in environments where money is cheap and abundant. If the Fed cuts rates, we could see fresh capital flow into risk assets—including crypto. 💧

✅ 2. Dollar Weakness = Crypto Strength

Inflation cooling often leads to a weaker U.S. dollar. Since Bitcoin and many altcoins are priced in dollars, a weaker dollar can push prices higher. There’s also the narrative of crypto as a hedge against fiat debasement, which gains traction when real yields turn negative. 📉

⚠️ 3. Short-Term Volatility Possible

Markets don’t move in straight lines. While this news is fundamentally bullish, we may see:

· Profit-taking after the initial rally.
· A shift in focus to other macroeconomic risks (like tariffs or geopolitical tensions). 🛡️

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📌 Final Thoughts: Stay Informed, Stay Ahead

This is a pivotal moment for macro markets. The four-year low in Core CPI is a clear signal that the inflation cycle is turning. For crypto investors, this could mark the beginning of a new phase—one where liquidity returns, risk appetite grows, and digital assets reclaim their spotlight.

🧧 At Gate Square, we believe in empowering our community with real data and real insights. Whether you’re here for the trades, the tech, or the culture—understanding macro trends like this is key to making smarter decisions.