Food, energy increases push up consumer index

Consumer prices have been all over the map in recent months. November and December's numbers were down while prices were up for four months before that. Now, January's numbers are up 0.7 percent, the biggest spike in four months.

The higher number has reinforced expectations that the Federal Reserve will raise interest rates in order to cool down the economy and put a clamp on inflation before it gets rolling.

Energy prices are getting the blame for the rise but food also cost more during the month. Consumers paid more for gasoline and heating bills. Clothing and cars also cost slightly more, boosting what economists call "core prices."

A separate report says wages didn't keep pace with inflation last month, causing workers to lose ground.

Analysts fear that rising energy prices will trickle over to the retail and manufacturing sectors, causing a rise in more than retail prices and triggering a more advanced case of inflation.

Economists interviewed by the Associated Press anticipate the Fed to raise interest rates again by the end of March. The rate-making board raised a key interest rate in January, marking the last major piece of business for then-chairman Alan Greenspan.

Another rate hike is anticipated in May, marking the end of a two-year credit tightening campaign.