Despite the warning signal, overall consumer prices rose just 0.2 percent, the Labor Department said on Friday, which is unlikely to ring alarm bells at the Federal Reserve.
Strong jobs and factory data have eased worries US economic growth could slow sharply, but tensions between Western nations and Iran still threaten to hand the economy a repeat of 2011 when a spike in energy prices hit the recovery hard.
"The greatest concern is that geopolitical strains in the Middle East will spill over into the oil market, pushing prices higher in a replay of last year's oil price spike," economists at Bank of America said in a note to clients.
For the Fed, an energy prices spike would represent a quandary: It could hurt the economy even as it boosts inflation. Gasoline prices increased 0.9 percent in January and they have continued to move higher this month.
"Consumers are going to feel a gasoline pinch in the first half of this year," said Chris Christopher, an economist at IHS Global Insight.
The report also showed so-called core prices, which strip out food and energy costs, rose 0.2 percent, pushing the increase over the last 12 months up to 2.3 percent.
While the year-on-year reading on overall prices has been easing, the steady pick-up in core suggests inflation pressures are not subsiding as quickly as expected, and it could lead to some wariness at the Fed about launching another round of bond purchases to drive borrowing costs lower.
"At the margin it does lean against the case for more (bond purchases)," said J.P. Morgan economist Michael Feroli.
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US stocks were little changed following the data, with investors reluctant to continue buying a day after the S&P posted its best daily gain in two weeks. Treasury debt prices edged down and the dollar was flat against a basket of currencies.
A separate report by the private Conference Board showed a gauge of future US economic activity rose to a 3-1/2 year high in January on solid gains in manufacturing.
Last month, Fed Chairman Ben Bernanke left the door open to further Fed bond buying to boost growth, but a steady stream of upbeat data in recent weeks has led analysts to dial down their expectations for a further easing of monetary policy.
In January, used car and truck prices fell 1.0 percent and new vehicle prices were flat, moderating the overall gain in core prices. Policymakers watch core prices closely because they see them as a better guide to inflation trends.
Despite the spike in gasoline prices, overall energy prices rose just 0.2 percent because electricity prices were flat and costs to consumers for piped natural gas services fell 2.9 percent.
Even so, gasoline prices remain a threat to the economy, with oil hovering near $120 a barrel on Friday. Iran is facing sanctions that could cripple its oil exports.
After rising throughout January, the national price for regular unleaded gasoline in the United States 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.
Gasoline pushes US inflation up in January
Publication Date:
Sat, 2012-02-18 00:39
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