U.S. inflation rises faster than expected - East Valley Tribune: Business

U.S. inflation rises faster than expected

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Posted: Wednesday, February 20, 2008 9:29 pm | Updated: 11:48 pm, Fri Oct 7, 2011.

WASHINGTON - Consumers paid more to fill up their gas tanks, buy groceries and go to the hospital in January as prices on a wide range of items pushed higher.

Inflation was increasing even as the economy was slowing dramatically, a development certain to raise concerns at the Federal Reserve, which has been cutting interest rates aggressively in the belief that fighting off a threatened recession was more important than worrying about inflation pressures.

The Labor Department reported that its Consumer Price Index posted a gain of 0.4 percent last month, matching the December increase and higher than the 0.3 percent rise that analysts had expected. Food costs jumped by the largest amount in 11 months, led by big gains for vegetables, fruit, poultry and pork. Core inflation, which excludes food and energy, rose by 0.3 percent, the biggest jump in this measure in seven months. That increase reflected higher prices for medical care, education, clothing, tobacco and airline fares. "The economy may be faltering, but that has not stopped firms from raising prices," said Joel Naroff, chief economist at Naroff Economic Advisers. "It didn't matter whether you went to the supermarket or ate out, costs were up."

With the latest increase, core prices have risen over the past 12 months by 2.5 percent, the biggest jump in 10 months and far above the Fed's comfort zone of 1 percent to 2 percent gains in the underlying inflation rate.

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