Medical Costs Boost

 Consumer Prices

WASHINGTON, D.C. (AP) — 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 February 28.

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.

The January performance was held back by further weakness in the ailing housing and auto industries. 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.

“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.