U.S. consumer prices increased more than expected in January, driven by rises in the costs of shelter and healthcare. However, this pick-up in inflation is unlikely to change expectations that the Federal Reserve will start cutting interest rates in the first half of this year. The consumer price index (CPI) rose 0.3% last month, according to the Labor Department, following a 0.2% gain in December. On an annual basis, it rose 3.1%. Economists had forecast a 0.2% increase on the month and a 2.9% rise year-on-year. Food prices rose 0.4%. Grocery food inflation also increased 0.4%, boosted by more expensive sugar and sweets as well as fats and oils. Prices for non-alcoholic beverages shot up 1.2%, while the cost of fruits and vegetables rose 0.4%. But cereals and bakery products were cheaper. Prices for meat, eggs and fish were unchanged. Gasoline prices dropped 3.3%. “Inflation is generally moving in the right direction,” said Lisa Sturtevant, chief economist at Bright MLS. “But it’s important to remember that a lower inflation rate does not mean that prices of most things are falling — rather, it simply means that prices are rising more slowly. Consumers are still feeling the pinch of higher prices for the things they buy most often.”
