(Updated from 8:37 a.m.)

The

Consumer Price Index for January rose much more than expected. This is the second piece of data in a week that is flaming fears of inflation.

CPI rose 0.6% last month. This key inflation measure was expected to rise only 0.3%, compared to a 0.2% increase in December. It was driven higher by energy and tobacco prices. Excluding volatile food and energy prices, the CPI rose 0.3%, also higher than the anticipated 0.2%. It had risen only 0.1% in December.

Investors had generally believed inflation was not a major problem. But last week's release of the latest

Producer Price Index rattled investors after it showed much more price inflation at the producer level than had been expected. The CPI measures prices that consumers pay. And today's data will also rattle them.

The 1.1% jump in the producer price index for January raised the possibility that

Federal Reserve chairman

Alan Greenspan is now facing a scenario that all central banks dread: inflation rising as the economy slows. When this happens, a central bank's hands are tied. The threat of inflation prevents it from cutting interest rates, the action it would normally take to boost growth. As a result, it must let a recession run its natural course. The Fed has reduced interest rates twice already in 2001 -- by half a percentage point on both occasions -- to jumpstart the economy.

TheStreet.com's

Peter Eavis recently took a look at these

inflation worries.

Stock futures dropped dramatically when the data was released.

Also factoring in today's trading session will be the latest data on

initial jobless claims and the

BTM-UBSW Retail Sales Index. These two weekly indicators provide a timely outlook on consumer moods.

CPI for January. Source: Labor Department. Actual: +0.6%. Forecast: +0.3%. Previous: +0.2%. Ex-food and energy: Actual: +0.3%. Forecast: +0.2%. Previous: +0.1%.

Forecasts are from

Reuters

. For a longer-term economic calendar and more, see

TheStreet.com's

Economic Databank.