U.S. Inflation Concerns Sparked by CPI Numbers

U.S. consumer prices rose considerably more than expected in January, stoking fears that inflation is about to turn dangerously higher.

Figures released Wednesday by the U.S. Labor Department revealed that the Consumer Price Index rose 0.5% last month against projections of a 0.3 percent increase. Excluding volatile food and energy prices, the index was up 0.3% against estimates of 0.2%

The department indicated that price pressures were "broad-based," with rises in gasoline, shelter, apparel, medical care and food.

Headline CPI rose 2.1% on an annualized basis, counter to expectations of 1.9%. Core CPI increased 1.8% vs. estimates of 1.7%

Investors were watching the report closely after fears of surging inflation helped send the stock market lower and bond yields higher. A strong rise in inflation would send borrowing costs higher and could cut into corporate profits.

U.S. Federal Reserve policymakers have a goal of 2% inflation, which they believe is a sign that the economy is strong but not moving too quickly. The gauge is not the central bank's most closely watched measure — that would be the personal consumption expenditures index — but still could figure into decisions on interest rates.

Most individual measures with the CPI showed gains, with a spike in fuel oil of 9.5% and a gain of 5.7% in gasoline leading.