US Inflation Jump Poses Fed Dilemma
U.S. consumer prices accelerated across the board last month, a worrisome sign for Federal Reserve officials who must balance a sharp slowdown in economic activity with stubbornly elevated price pressures.

Still, the inflation data likely won't deter Fed officials from lowering official interest rates again next month, as guarding against recessionary risks remains their top priority. But the figures could limit the size of future rate cuts as the Fed struggles to maintain the public's confidence that it will keep inflation under wraps.

The consumer price index rose 0.4% in January, the Labor Department said. The core CPI advanced 0.3%. The data exceeded Wall Street forecasts.

Unrounded, the CPI rose 0.395% last month. The core CPI advanced 0.311% unrounded. Consumer prices rose 4.3% on a year-over-year basis, matching the biggest increase since September 2005. The core CPI grew a more modest 2.5% compared to January 2007.

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