WASHINGTON (Reuters) - U.S. consumer prices increased in January, with a gauge of underlying inflation posting its largest gain in 12 months, bolstering views that price pressures will accelerate this year.
Those expectations were underscored by other data on Thursday showing the number of Americans filing for unemployment benefits fell last week to a 48-year low as the labor market tightens. Another a survey showed prices paid by manufacturers for raw materials hit a more than six-year high in February.
The combination of rising inflation and a robust labor market could force the Federal Reserve to raise interest rates a bit more aggressively this year than currently anticipated as it worries about the economy overheating. The U.S. central bank has forecast three rate hikes in 2018. The first rate increase is expected later this month.
“The Fed wanted to see more inflation and it looks like it is getting it,” said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.“I am down for four (rate hikes) because the acceleration in inflation is not likely to fade anytime soon.”