US consumer prices showed signs of acceleration in January

Associated Press

WASHINGTON

U.S. consumer prices were unchanged in January, as the rising costs of housing and health care largely were offset by cheaper oil.

But the annual pace of inflation showed signs of acceleration. The Labor Department said Friday that prices have risen 1.4 percent over the past 12 months, compared with a year ago when annual inflation was close to zero. Consumer prices climbed at the fastest annual rate since October 2014.

Core inflation, which excludes volatile energy and food costs, rose 0.3 percent in January. Over the past 12 months, this category closely watched by the Federal Reserve has climbed 2.2 percent.

The rising tempo for inflation follows a Fed decision in December to raise a key short-term interest rate for the first time in nearly a decade. But the turmoil in the stock and bond markets after the Fed rate hike suggested to many investors that inflation might barely budge amid a slowing global economy.

Jennifer Lee, a senior economist at BMO Capital Markets, said that January’s report on consumer prices affirms the Fed’s decision and raises the potential for further rate increases later this year.

“In a way, this justifies the December rate hike and keeps the Fed at the rate hike table,” she said.

The combination of a strong dollar and cheaper oil has suppressed inflation across much of the economy.