Consumer prices rose 0.5 percent in January and 6.4 percent annually, according to Labor Department’s consumer price index released Tuesday, a jump in inflation which could encourage the Federal Reserve to further raise interest rates.

Core inflation, which excludes volatile food and energy prices, came in at 0.4 percent on a month-to-month basis and 5.6 percent annually.

Annual inflation continues to decline from its high of 9.1 percent in June, a 40-year high.

Still, the pace of monthly price growth accelerated in January from December, when prices rose 0.1 percent. 

Food prices rose 0.5 percent in January, while housing costs rose 0.7 percent, making up for the bulk of the increase.

Read more: The 5 weirdest things measured by the CPI

The annual inflation figure, which came in slightly above analysts’ expectations, may push the Fed into steeper or more interest rate hikes in an effort to slow the economy and reduce demand for goods and services. 

Earlier this month, the Fed rolled out its smallest rate hike since March 2022 as inflation appeared to ease, but that strategy could change if prices don’t fall fast enough.

Fed Governor Michelle Bowman said Monday that inflation “continues to be much too high.”

She said additional rate hikes are necessary to bring inflation down to the Fed’s 2 percent target, even if they cause economic pain. 

“While there are costs and risks to tightening monetary policy to lower inflation, I see the costs and risks of allowing inflation to persist as far greater,” Bowman said. 

On the year, grocery prices are up 11.3 percent, energy prices are up 8.7 percent and housing costs are up 7.9 percent, putting a dent in Americans’ finances.

“Going forward, inflation is unlikely to maintain its recent pace of deceleration,” ZipRecruiter lead economist Sinem Buber wrote in a note.

The price of used cars is one of the few areas where inflation is easing, with prices dropping 11.6 percent annually after skyrocketing in previous years.