WASHINGTON - Consumers paid more to fill their gas tanks and buy groceries and other goods and services in January.
January core inflation rose most in 7 months
February 21, 2008 at 3:34AM
The Labor Department reported that its consumer price index rose 0.4 percent last month. That matched the December increase and was higher than the 0.3 percent rise analysts had expected. Food costs jumped by the largest amount in 11 months.
Core inflation, which excludes food and energy, rose by 0.3 percent, the most in seven months, reflecting higher prices for medical care, education, clothing, tobacco and air fares.
With the latest increase, core prices have risen by 2.5 percent over the past 12 months, far above the Fed's comfort zone of 1 percent to 2 percent gains. The increase in inflationary pressures comes as economic growth has slowed sharply, raising concerns the country might be falling into a recession.
The Fed last month began an aggressive campaign to cut interest rates. Analysts said they believe the Fed will see the threat of a recession as a bigger risk at the moment than the rise in inflation. But some predicted that the Fed might cut rates by one quarter of a percentage point at its March 18 meeting rather than the half-point move that markets are expecting.
A second report Wednesday showed that the housing sector remains in a steep downturn. Residential construction rose 0.8 percent in December to an annual rate of 1.012 million units. But all the strength came from a rebound in apartment construction, which had plunged in December. The larger single-family sector fell by 5.2 percent last month.
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Health care spending rose by 15%, driven by higher prices. Officials say solutions are needed to prevent Minnesotans from being priced out or delaying care they need.
