Consumer prices post surprise gain, but ...

NEW YORK (CNNMoney.com) -- Consumer prices rose a bit more than economists had expected in January, according to a government report Wednesday, but the numbers don't necessarily point to a huge pickup in inflation.

The Consumer Price Index, the government's main inflation gauge, rose 0.2 percent in January, the Labor Department reported, after gaining 0.4 percent in December. Economists surveyed by Briefing.com had forecast a 0.1 percent increase.

The so-called core CPI, which strips out volatile food and energy prices, rose 0.3 percent in January after a 0.1 percent gain in December. Economists had forecast that closely watched reading would increase 0.2 percent.

The January readings left core CPI up 2.7 percent from a year earlier. Consumer prices overall, however, were up 2.1 percent compared to last year's January reading.

Energy prices declined 1.5 percent in January after climbing in December. But consumer prices climbed across a number of categories including housing, clothing, food and particularly medical care.

Sam Stovall, chief investment strategist with Standard & Poor's, said that if you strip out medical costs, the rise in core prices looks less worrisome.

"We don't think it has changed our opinion that the Fed isn't going to tighten interest rates any times soon," Stovall said. "The odds might have increased slightly because of today's report, but we are still expecting the Fed to possibly loosen rates that end of this year."

At its most recent policy meeting, the Federal Reserve left interest rates unchanged at 5.25 percent, the fifth straight time the central bank has held interest rates steady.

Last week, Fed Chairman Ben Bernanke testified before Congress that inflation pressures appeared to be easing due to current monetary policy, although he warned that inflation remained a threat and that the central bank will prepared to take action if necessary. (Full story)

The report comes just days after a surprising decline in the Producer Price Index, which measures inflation at the wholesale level. (Full story)

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