The inflation numbers reinforce the Federal Reserve’s intention to start hiking rates next month, and have already altered market expectations. Matthew Luzzetti, chief US economist at Deutsche Bank, changed his outlook on a March hike after the figures were released, AFR reported.

“This morning’s CPI data, which rose more than expected with outperformance driven by persistent items like rent and medical services, has turned that risk scenario into a baseline,” Luzzetti said. “With inflation pressures showing signs of accelerating in the near term, we now anticipate that the Fed will undertake a 50bp rate hike in March to kick off the tightening cycle.”

Bank of America’s Alexander Lin has predicted seven 0.25-percentage-point rate hikes this year due to inflation, AFR reported.

“For the Fed, this report provides another wake-up call,” Lin said. “Inflation is here and it continues to make its presence known everywhere. We remain comfortable with our hawkish call for the Fed to hike seven times this year, beginning at the next FOMC meeting in March.”