US CPI jumps in January, core prices also higher

US consumer prices sped past forecasts in January, with a key measure of 'core' inflation coming in significantly ahead of market forecasts.

Headline consumer prices rose by 0.6% over the month, according to the Bureau of Labor Statistics.

Economists had penciled in a gain of 0.3% on the month.

Against the year ago month, the cost of living was 2.5% higher, up from 2.1% in the prior month (consensus: 2.4%).

At the so-called 'core' level, CPI was up by 0.3% over the month (consensus: 0.2%) and by 2.3% on the year (consensus: 2.1%).

"Today’s report was solid, although we warn against extrapolating this pace of increases. Many of the strong rises (energy, apparel, airfares) come from volatile components and are unlikely to be sustained at the January pace going forward. Having said that, we maintain our view that core CPI is gradually firming up and positive energy base effects are providing a further boost to headline," said Blerina Uruci at Barclays Research.

"We still believe that domestic price pressures remain strong and supportive of core CPI, which is evident in solid core services inflation, in particular the shelter component."

Uruci also pointed to the improving trend in import and factory gate prices which suggested weakness in core goods prices had likely bottomed out and would move towards neutral in annual terms.

As labor markets continued to improve and slack diminished further core services CPI would drive prices higher, Uruci added.