WASHINGTON (AP) — U.S. consumer prices rose in January at the fastest pace in nearly four years, strengthening the case for the Federal Reserve to raise interest rates this year.
The Labor Department said Wednesday consumer prices rose 0.6 percent last month, most since February 2013 and twice what economists were expecting. A 7.8 percent jump in gasoline prices accounted for almost half the increase. Stripping out volatile food and energy prices, consumer inflation rose 0.3 percent.
Food prices rose in January for the first time in seven months. Grocery prices were unchanged, but the cost of eating out rose 0.4 percent. The price of clothing, new cars, auto insurance and air fares all rose by 0.8 percent or more in January.
Overall, consumer prices rose 2.5 percent from a year earlier, most since March 2012. Core inflation rose 2.3 percent over the last 12 months.
After remaining low in the aftermath of the 2007-2009 Great Recession, inflation is running above the Fed’s 2 percent annual target.
The Fed left a key interest rate unchanged at its Jan. 31-Feb. 1 meeting. It raised rates in December for only the second time in a decade. Fed Chair Janet Yellen on Tuesday told a Senate committee that the central bank will likely resume raising rates in the next few months.
But with uncertainties surrounding President Donald Trump’s proposals on taxes, spending and trade, Yellen said the Fed still wants to keep assessing the economy.