Consumer prices rise less than expected in January

Consumer prices rose less than expected in January, while prices excluding food and energy fell for the first time since 1982, according to a government report on Friday that soothed worries inflation pressures were starting to build up.

The Labor Department said its seasonally adjusted Consumer Price Index rose 0.2 percent last month, lifted by a spike in energy costs, after rising 0.2 percent in December.

Analysts polled by Reuters had forecast consumer prices rising 0.3 percent in January. Compared to January last year, prices rose 2.6 percent, also below market expectations for a 2.8 percent increase.

Energy costs soared 2.8 percent last month after rising 0.8 percent in December. Food prices climbed 0.2 percent following a 0.1 percent gain in December.

A surprise surge in prices paid at the farm and factory gate last month, owing to higher gasoline costs, had fanned fears that inflation pressures could soon weigh on the economy, which is recovering from the most brutal recession in 70 years.

Stripping out volatile energy and food prices, the closely watched core measure of consumer inflation fell 0.1 percent in January, the first decline since December 1982. Core prices rose 0.1 percent the prior month.

Analysts had expected core prices to rise 0.1 percent. Core prices were pulled down by declining costs for new vehicles, shelter and airline fares. High vacancy rates are keeping rentals depressed.

Compared to January last year, the core inflation rate rose 1.6 percent after increasing 1.8 percent in December.

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)