U.S. gasoline prices jumped 0.9 per cent in January, pushing overall consumer prices up at their fastest clip in four months and offering a reminder of the risks energy costs could pose to the economic recovery.
Still, the 0.2-per-cent increase in the Consumer Price Index reported by the Labor Department on Friday is unlikely to ring alarm bells at the Federal Reserve, which is trying to decide whether the economy needs another dose of monetary stimulus.
"(The data) doesn't prevent another round of quantitative easing to stimulate the economy," said Brian Kim, a currency strategist at the Royal Bank of Scotland in Stamford, Conn.
The rise in prices was just below analysts' expectations of a 0.3-per-cent increase.
The gain in gasoline prices was the first in four months. Tensions in the Middle East have been pushing oil prices higher, leading to extra costs at the pump for Americans.
After rising throughout January, the national price for regular unleaded gasoline prices rose to $3.58 a gallon in the week through Monday, according to the Energy Information Administration. It had started the year around $3.32 a gallon.
The Labor Department report showed that after stripping out food and energy, the so-called core reading rose 0.2 per cent, which was in line with expectations.
However, the report also showed the rate of core price increases in the twelve months through January unexpectedly climbed to 2.3 per cent.
The increase in the 12-month core reading, which is seen as a barometer of inflation trends, might be read as a sign that inflation pressures are not subsiding as quickly as expected.
At the close of its January meeting, the Fed said it would likely keep interest rates at rock-bottom levels until at least late 2014. Fed chairman Ben Bernanke expressed caution about recent improvements in the economy and left the door open to further Fed bond buying to boost growth.
U.S. stock investors shrugged off the inflation data. U.S. Treasury debt prices held at lower levels.
Earlier, world stocks hit a fresh 6-1/2 month high and the euro held above recent lows as hopes Greece will seal a long-awaited bailout deal next week fuelled risk appetite.
Overall consumer prices rose 2.9 per cent year-on-year after increasing 3.0 per cent in December. That was in line with economists' expectations.
Moderating the monthly gain in core prices, used car and truck prices fell 1.0 per cent and new vehicle prices were flat.