Washington | US inflation hit a 40-year-high in January after food, electricity, and shelter drove a bigger than expected rise in the consumer price index and pushed financial markets to price in a higher chance the Federal Reserve will hike rates by 0.50 percentage points in just over a fortnight.

The consumer price index climbed 7.5 per cent from a year earlier following a 7 per cent annual gain in December, according to Labor Department data released Thursday. Economists had expected the annual figure of 7.3 per cent.