Consumer prices rose modestly in January on higher costs for food, gas, rent and clothing.
But economists downplayed the increase, saying inflation will likely ease in the coming months as prices for raw materials level off.
The consumer price index increased 0.2 per cent last month, after a flat reading in December, the Labor Department said Friday.
Excluding volatile food and energy, so-called "core" prices ticked up 0.2 per cent. A big reason for the increase was that clothing prices jumped 0.9 per cent. Medical care, rent and tobacco prices also increased.
Car prices were unchanged, and airfares fell.
Core inflation over the past 12 months moved up to 2.3 per cent - its highest point in more than three years. A steady rise in core prices could limit the Federal Reserve's ability to take steps to boost the economy.
Still, economists said inflation is likely peaking. For example, clothing prices are higher because of spike last year in the cost of cotton. When the impact of the cotton hike fades, clothing costs should level off.
Guy LeBas, fixed income strategist at Janney Montgomery Scott, said the rise in the core reflected a delayed response to those soaring commodity prices.
The report "points to a benign path for inflation for 2012," LeBas said. "Consumer demand is fairly anemic right now ... firms can't raise prices when nobody's buying."
The Fed last month said it plans to hold its benchmark interest rate at a record low near zero until late 2014. If inflation were to rise rapidly, the Fed would come under pressure to increase rates.
A small amount of inflation can be good for the economy. It encourages businesses and consumers to spend and invest money sooner rather than later, before inflation erodes its value.
And modest inflation, combined with recent increases in income, gives consumers more buying power and should add to economic growth.
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