US 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.
The Commerce Department said on Thursday consumer prices as measured by the personal consumption expenditures (PCE) price index, rose 0.4 percent. That was the biggest increase since September and followed a 0.1 percent gain in December.
In the 12 months through January, the PCE price index rose 1.7 percent after a similar gain in December because of base effects. Excluding the volatile food and energy components, the PCE price index advanced 0.3 percent in January - the largest gain since January 2017.
The so-called core PCE price index rose 0.2 percent in December. Unfavourable base effects also kept the annual increase in the core PCE price index at 1.5 percent in January. The core PCE index is the Federal Reserve's preferred inflation measure.
Economists polled by Reuters had forecast the core PCE price index rising 0.3 percent in January and advancing 1.5 percent year-on-year. The core PCE price index has undershot the US central bank's 2 percent target since mid-2012.
Inflation is expected to breach its target this year as a tightening labour market boosts wage growth. Faster economic growth, spurred by a $1.5 trillion tax cut package and increased government spending, is also seen stoking inflation.