Consumer prices increase 0.4% in January, above estimate

Consumer prices increased 0.4% in January 2008, above the 0.3% consensus estimate, driven higher by energy and food prices, the U.S. Labor Department announced Wednesday.

The core January 2008 CPI -- which excludes food and energy -- rose 0.3%, also above the 0.2% consensus estimate.

On a year-over-year basis, or since January 2007, the CPI increased 4.3% -- well above the U.S. Federal Reserve's comfort zone for inflation. Meanwhile, core inflation increased 2.5% during the same period. Apparel rose 0.4%, medical care increased 0.5% and professional service costs increased 0.4%.

Economist Steve Affinito termed the January 2008 CPI data, "a bad report."

"Clearly we're by no means out of the woods yet regarding inflation," Affinito said. "In this report we can clearly see the impact of higher energy prices rippling through the cost structure. The report is going to make it harder for Fed officials to continue to ease monetary policy if necessary to stimulate economic growth."

Affinito said that as economists collect more data points in the era of high energy prices, economists are beginning to see a pattern between the high-energy-price inflation of the 1970s, and today's economic data. "We're a more energy efficient economy now than we were in the 1970s, but clearly energy is accounting for at least 40-45% of this inflation total," Affinito said. "If we can get a moderation in oil prices in 2008, it will really help policy makers both in the U.S. and globally."