Consumer prices in North Texas have fallen. This marks the first year-over-year decrease since 2020. The U.S. Bureau of Labor Statistics reported this change. It happened in January 2026. This news offers a significant shift. It contrasts with recent trends of rising costs. The overall Consumer Price Index (CPI) dropped 0.3% in January. This occurred compared to the same month last year. However, prices did climb slightly from two months prior. This indicates ongoing fluctuations in the market.
Energy Costs Drive Down Prices
The year-over-year decline owes much to energy prices. The energy index fell 4.0%. Gasoline prices saw a steep drop. They decreased by 12.5% over the year. This significant reduction in fuel costs impacted overall consumer spending. Transportation costs also contributed. Prices for new and used vehicles declined. Clothing and rental bills also showed decreases. These drops provided some relief for North Texas residents.
Food Prices Continue Upward Trend
Despite the overall price drop, some costs remain high. Food prices saw a notable increase. They rose 2.5% from the previous year. Food purchased at home specifically climbed higher. Meats, poultry, fish, and eggs increased by 4.1%. Fruits and vegetables experienced an even larger jump. They rose more than 5%. This persistent food inflation strains household budgets. Medical care costs also climbed. They went up 2.6%.
National Economic Context
This North Texas trend mirrors broader national economic shifts. Across the U.S., consumer prices showed a cooler rise in January. National inflation dropped to 2.4%. This is down from 2.7% in December. These softer inflation numbers are encouraging for investors. They suggest the Federal Reserve has more room for interest rate cuts.
The U.S. job market also shows resilience. Initial jobless claims fell to 227,000. This level indicates sustained healthy employment. However, some companies are still announcing layoffs. This includes major names like UPS and Amazon. Job openings also fell to a five-year low.
Texas Business and Economic Outlook
The Texas economy shows signs of continued growth. The Dallas Fed forecasts 1.1% job growth for 2026. This implies about 155,000 new jobs statewide. However, this pace is slower than Texas’ historical average. Last year, Texas saw very little job growth. Factors like higher productivity and slower immigration affected hiring. Employers also showed more caution due to policy uncertainty.
Several sectors experienced job losses. These include energy, manufacturing, and government. Construction, education, and health services saw job gains. Among major Texas metros, Austin led in growth. San Antonio, however, saw a decline.
Factors Influencing Texas Economy
Tariffs and trade policy uncertainty continue to affect the Texas economy. Many businesses report rising input costs. Some are passing these costs to consumers. Reduced immigration also impacts the labor force. This affects recruitment and retention for businesses.
The housing market in North Texas is also shifting. Median sales prices declined 5.3% year-over-year in December 2025. Homes spent more time on the market. This market correction offers buyers more leverage and improved affordability. The North Texas real estate market appears to be finding balance. It is moving towards stability rather than volatility in 2026.
Future Economic Considerations
Inflation is expected to continue easing nationally. Most forecasts predict further declines by late 2026. This could bring inflation closer to the Federal Reserve’s 2% target. Lower inflation might allow for more interest rate cuts. However, businesses may still pass on some tariff costs. Affordability remains a key concern for consumers. The economic outlook for Texas in 2026 suggests modest recovery. It is not expected to be a period of rapid expansion. Businesses and policymakers must navigate these evolving economic conditions.
