The prices Americans pay for goods and services surged in January by the largest amount in four years, mostly reflecting a rebound in the cost of gasoline that’s taking a bigger chunk out of household incomes.
The consumer price index, or cost of living, rose by a seasonally adjusted 0.6% in January, the government said Wednesday. Economists polled by MarketWatch had predicted a 0.3% increase.
As has been the case lately, a big increase in the cost of gasoline accounted for almost half of the increase in consumer inflation in January.
The cost of filling up at the gas station has climbed to a nationwide average of $2.30 a gallon from just under $2 last spring, according to government figures.
The rising cost of gasoline is pinching U.S. households and pushing inflation higher after several years of little price pressures, a trend that could also spawn higher interest rates in the near future.
Over the past year the consumer price index has climbed 2.5%, the biggest increase in a 12-month span in five years.
The combination of mild increases in worker pay and higher inflation could put a damper on consumer spending moving forward. Real hourly wages fell by 0.5% in January, reflecting the squeeze put on consumers by higher gasoline prices.
Real or inflation-adjusted wages are flat over the past 12 months.