Consumer prices rose much more than expected last month — by a seasonally adjusted 0.5 percent in January, compared with 0.2 percent in December — the Labor Department reported Friday.
The increase, spurred on primarily by fuel costs, was not expected to signal a major change in the outlook for monetary policy and interest rates. The closely watched core index, which reflects all all items except for food and energy, increased 0.2 percent in January, following a 0.1 percent rise in December.
Last month gasoline prices jumped 8.1 percent; natural gas prices, 3.8 percent; and fuel-oil costs, 7.2 percent. Yet a mere 0.3 percent increase in food costs helped consumers save a few extra coins to fill up their gas tanks. Furthermore, last month clothing prices dropped 0.3 percent; new-car prices, 0.1 percent; and prices for telephone services, 0.2 percent.
The 0.5 percent increase in the consumer price index is the largest since February 2003, which saw a similar jump in the CPI. Yet in the wake of recent signals from Federal Reserve chairman Alan Greenspan, the overall buzz in the markets seems to be that the CPI increase hardly rises to the level of an “inflationary occasion” that would spur a reaction from credit markets or the Fed.