Inflation staged an unexpected rebound in January thanks in large part to a steep increase in consumer spending and household incomes, according to Commerce Department data released Friday.

While the economy appeared to be losing strength in December, the stunning January jobs report — along with stubborn inflation and booming retail sales — paint the picture of an economy far from fading.

The personal consumption expenditures (PCE) price index — the Fed’s preferred gauge of inflation — rose 0.6 percent in February and 5.4 percent over the past 12 months. It was the first increase in annual PCE inflation rate since June, when it peaked at 7 percent.

Personal income rose 0.6 percent after falling since October. Consumer spending also rose 1.1 percent on the month, the largest monthly increase since President Biden signed off on the final round of COVID-19 stimulus checks in March 2021.

“After showing signs of cooling in late 2022, incomes and consumer spending came roaring back in January. Unseasonably mild winter weather amplified but did not fully explain those gains,” wrote Diane Swonk, chief economist at KPMG, in a Friday analysis.

“The resilience of the consumer and accompanying acceleration in inflation are red flags to the Fed. They have little choice but to raise rates by half a percent at the meeting in March,” she continued.

“Brace yourself for a call for rate hikes by some members to hit 6% or higher at that meeting.”