U.S. consumer prices rose by a cooler-than-expected 2.4% year-on-year in January, according to Labor Department data released Friday. The figure came in below economists' forecasts of 2.5% and marked a deceleration from December's 2.7% pace, edging closer to the Federal Reserve's 2% inflation target.

The monthly CPI increased by 0.2%, compared to expectations of matching December's 0.3% rise. Shelter and food costs drove much of the monthly increase, though these gains were partially offset by falling energy prices. The report showed inflation remains sticky in some areas while cooling in others.

Core CPI, which excludes volatile food and fuel prices, rose 2.5% year-on-year and 0.3% month-on-month, in line with forecasts. Higher prices for services like air travel and medical care were tempered by lower costs for used cars, household furnishings, and motor vehicle insurance. The data suggests the Fed may have more flexibility in its monetary policy decisions as inflation moderates toward target levels.