The latest data from the Commerce Department’s Personal Consumption Expenditures (PCE) index showed a surprising surge in core prices, as consumers increased their spending in January.

The PCE index, a key inflation gauge used by the Federal Reserve, revealed that core inflation, which excludes volatile food and energy prices but includes clothes, transportation, and housing costs, rose by 0.6% from December to January, up from 0.4% the previous month.

In addition, the overall PCE index also jumped by 0.6% in January compared to December, higher than economists’ expectations and the largest monthly gain since June, posing a setback in the central bank’s attempt to reduce costs for ordinary Americans.

“This is a bump in the road for the Fed,” Jeremy Schwartz, senior U.S. economist at Credit Suisse Group, told The Wall Street Journal. “They have more work to do.”

In January, prices increased by 5.4% compared to the same month last year, which was higher than the 5.3% increase in December.

Additionally, core prices increased by 4.7% year-over-year. These figures indicate that inflation is still present in the US economy, causing concern among investors that the Fed may increase interest rates to combat rising prices. The PCE inflation report caused a decline in stock prices.

Although inflation has decreased from its peak of 9.1% in the middle of last year, it still remains well above the Fed’s target rate of 2%.

“The inflation readings are still not where we need them to be,” Cleveland Fed President Loretta Mester told Bloomberg in a Friday interview.

Mester added that the PCE inflation data “just consistent with the fact that the Fed needs to do a little more on our policy rate to make sure that inflation is moving back down.”

According to the report, there was a 1.8% increase in consumer spending in January following a minor decline in December.

This has led investors to estimate a 67.1% chance that the Fed will increase benchmark interest rates by a quarter percentage point during their upcoming meeting on March 22. CME Group data indicates that about 33% of investors anticipate a larger increase of half a point.

According to the report, there was a 1.8% increase in consumer spending in January following a minor decline in December. This has led investors to estimate a 67.1% chance that the Fed will increase benchmark interest rates by a quarter percentage point during their upcoming meeting on March 22. CME Group data indicates that about 33% of investors anticipate a larger increase of half a point.

In the beginning of the month, the Consumer Price Index, which is more commonly tracked, revealed a greater-than-anticipated inflation increase of 6.4% in January.

Meanwhile, the job report for January displayed that the US economy generated 517,000 new jobs, resulting in an unemployment rate of just 3.4%, the lowest it has been in 53 years, even with the Fed’s efforts to tighten policy.