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“The critical thing is down, but not down nearly as much as we expected and not down nearly as much as you would hope if you were, as the Fed is, currently trying to get the inflation back to some kind of normal.”

The increase largely due to rising shelter costs which accounted for nearly half the surge. Other key household budget items like food, gasoline, and natural gas also got more 4expensive in January; along with pricier motor vehicle insurance, recreation, 5apparel, and 6home furnishings. There were a few bright spots, though. Prices for used cars, medical care, and airline fares all falling from December. The new report comes on the heels of an 7unexpectedly strong January jobs report that saw a gain of more than half-a-million jobs. High inflation and a strong jobs market painting a 8confusing picture for economists.

“We were heading in a high inflationary environment. And the 9probability for 10recession was significantly higher, now, that’s completely been 11turned upside down.”

Efforts by the Fed to 12ease inflation have yet to 13materialize in the economy, experts say, and more interest rate hikes are likely 14on the way.

“We’re just not seeing the 15cracking in the economy that people had anticipated at this stage, and I think it remains to be seen when that will go up.”