Headline CPI (Consumer Price Index) inflation climbed 0.5% in January, the Labor Department announced today. That was above the 0.4% increase expected by economists surveyed by Briefing.com. (Economists surveyed by Bloomberg had expected a 0.3% increase.)

Core CPI, which excludes more volatile food and energy prices, climbed 0.3% in January. Economists surveyed by Briefing.com had expected a 0.2% increase.

The headline CPI is now up 2.1% year over year. That’s a slight dip from the 2.2% year over year rate in December.

The core CPI is now up 1.8% year over year.

One point of concern is that the annual rate understates the recent acceleration in inflation. Annualizing the increase in inflation over the last three months gives a year over year rate of 2.9%. That’s the fastest rate of increase since 2011, according to Bloomberg.

The Fed’s inflation target is 2%. (The central bank uses the PCE inflation index rather than the CPI, but the core CPI tracks that index fairly well.)

The increase in the headline inflation number was driven by a 1.7% increase in the index for apparel prices. That’s the biggest jump in that category in almost three decades.

As you might expect, these numbers have confirmed the markets’ belief that the Federal Reserve will raise interest rates at its March 21 meeting. According to the CME FedWatch tool, the odds of an interest rate increase at the March 21 meeting climbed to 83.1% today from 76.1% yesterday. Odds on a rate increase by the May 2 meeting of the Fed grew to 84.2% today from 77% yesterday. The Federal Reserve hates to surprise the financial markets and it’s a useful rule of thumb to regard any odds above 65% as pretty much assuring an interest rate move. So unless we see the Fed actively starting to talk down market expectations for a March 21 interest rate increase, I’d say this one is a done deal. Which leaves the big question: How many rate increases will there be in 2018? Wall Street forecasts currently are all over the block between two increases and four.

In separate economic news today retail sales fell unexpectedly in January and the December sales figures were revised downward.

On the inflation report, the yield on the 10-year Treasury climbed to 2.88%, a 5 basis point increase from yesterday’s level. Stocks are holding up well despite the news with the Dow Jones Industrial Average down 0.02% and the Standard & Poor’s 500 stock index ahead 0.52% as of noon New York time. The VIX, the CBOE S&P 500 Volatility Index, is down 21.67% this morning to 19.56 as volatility continues to retreat from its spike during the market drop.