WASHINGTON, Feb. 14 (Xinhua) -- U.S. inflation rose more than expected in January, with the core consumer price index (CPI) posting its biggest gain in a year, increasing expectations that the Federal Reserve will raise interest rates at a faster pace.

The CPI increased 0.5 percent in January on a seasonally adjusted basis, the Department of Labor reported Wednesday. Over the last 12 months, the index rose 2.1 percent before seasonal adjustment.

"The seasonally adjusted increase in the all items index was broad-based, with increases in the indexes for gasoline, shelter, apparel, medical care, and food all contributing," said the department.

The core inflation, which excludes volatile food and energy prices, increased 0.3 percent in January, and rose 1.8 percent over the past year.

With the tightening labor market, a weak dollar, tax cuts stimulus, and increased government spending, the inflation index has been heading towards the Fed's 2 percent target.

The latest strong inflation report could put more pressure on U.S. financial markets, which have been spooked by expectations of faster-than-expected increases in interest rates.

U.S. stocks fell half a percent at the open on Wednesday. U.S. stock futures had fallen by more than 1 percent after the data was released.

The U.S. central bank raised interest rates three times in 2017 and forecast three increases in 2018.