Prices, inflation higher than expected

first_img“We got a nasty little surprise from the health care sector,” said David Wyss, chief economist at Standard & Poor’s in New York. “This is definitely a worrisome inflation report.” Analysts said many insurance plans overhaul their reimbursement schedules in January but the concern would be if the sharp increases continue in coming months.160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! The January performance was held back by further weakness in the ailing housing and auto industries. Economists said that the worse-than-expected news on inflation and future growth prospects was certain to get the attention of Federal Reserve Chairman Ben Bernanke and his colleagues. For January, energy prices dropped by 1.5 percent, but food prices were up 0.7 percent, the biggest rise since the spring of 2005, as the cost of dairy products, fruits and vegetables all showed big gains. The cost of medical care shot up 0.8 percent, the biggest increase in more than 15 years, reflecting higher costs for prescription drugs and doctor services, which were rising in January at the fastest clip in 25 years. Airline tickets jumped by 2.1 percent, the biggest gain since November 2004. The cost of tobacco products rose by 3.1 percent, the largest increase in 4 years. WASHINGTON – Consumer prices increased at a faster pace than expected in January while a gauge of future economic activity posted a tiny increase, raising concerns about inflation and future growth. The Consumer Price Index was up 0.2 percent in January as a big drop in energy prices only partially offset sizable increases in the cost of medical care, food, airline tickets and tobacco, the Labor Department reported Wednesday. Core inflation, which excludes volatile energy and food components, rose 0.3 percent, the biggest one-month gain in seven months. Both figures were higher than economists had been expecting. In other economic news, the Conference Board’s index of leading economic indicators edged up a tiny 0.1 percent in January, far below the 0.6 percent December increase. last_img read more