Key Fed inflation measure rose 0.6% in January, more than expected

A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices.

The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%.

Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively.

Markets fell following the report, with futures tied to the Dow Jones Industrial Average off more than 300 points.

Consumer spending also rose more than expected as prices increased, jumping 1.8% for the month vs. the estimate for 1.4%. Personal income increased 1.4%, higher than the 1.2% estimate. The personal saving rate also was up, rising to 4.7%.