Consumer Prices Advance 0.7%

The core rate of inflation was up 0.2% last month.
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Consumer-level prices advanced at a slightly faster pace than economists expected last month, driven by a 5% increase in energy costs, but underlying inflation appeared to be generally under control.

The overall consumer price index rose 0.7% in January, following declines in both of the previous months, the Labor Department said Wednesday. The consensus estimate was for a 0.5% rise. Higher energy costs accounted for about 70% of the advance in the overall index.

The core CPI, which excludes the influence of food and energy prices, was up 0.2% last month, in line with expectations. Core prices rose 2.1% over the last 12 months.

All told, the data will likely do little to lessen the growing belief that the

Federal Reserve

will hike rates at least one more time and possibly two more in the coming months. Last week, the government said the producer price index was up 0.3% in January, while the core PPI rose 0.4%.

Returning to the CPI, the food and beverages index rose 0.5% in January, and the index for housing increased 0.5% after a 0.2% climb in December. The transportation index was higher by 1.8% in January. Gasoline prices, which had declined in each of the preceding three months, rose 6.4% last month and were responsible for nearly 90% of the transportation hike.

The index for apparel gained 0.3% last month, following a 0.3% drop in December. Medical-care costs were up 0.1% in January.