Published: Wed, February 14, 2018
Economy | By

USA consumer prices in surprise January rise

USA consumer prices in surprise January rise

The U.K.'s consumer price inflation remained at 3 percent in January, beating expectation of economists, according to the Office National Statistics (ONS).

On a monthly basis, overall consumer prices fell 0.5 percent compared to expectations of 0.6 percent drop. Inflation was forecast to slow to 2.9 percent.

Most major forecasters believed that inflation would peak in late 2017, and start to fall as 2018 progresses, thanks in part to sterling's recent recovery to nearly $1.40.

RLA Policy Director, David Smith, said: "Today's figures show that rent controls are unnecessary and would act against the interests of tenants by making them worse off".

Prices of new motor vehicles slipped last month and the costs of recreation, communication and alcohol were unchanged.

The fairly strong inflation report from the Labour Department on Wednesday could put more pressure on USA financial markets, which were spooked by a surge in annual wage growth in January.

Meanwhile, it stated that the Urban inflation rate rose by 15.56 per cent (year-on-year) in January 2018 from 16.78 per cent recorded in December 2017.


Industrial production data for December declined compared month-on-month but a comparison based on yearly basis showed it rose from a meagre 2.4% in December past year. The yield on the 2-year Treasury note shot higher as well.

ONS senior statistician James Tucker said: "Headline inflation was unchanged with petrol prices rising by less than this time past year".

However, there are early signs that domestically driven inflation from changing dynamics in the labour market could finally be creeping in.

Meanwhile, Reserve Bank of India (RBI) on Wednesday held the policy repo rate at 6% as the central bank's Monetary Policy Committee (MPC) raised the estimate for fourth-quarter inflation and flagged concerns about the future outlook for price gains.

Economists surveyed by MarketWatch had forecast a 0.4% increase. In fact, if the softening expected in 2H-FY19 does not materialise, the risk would be that of a rate hike somewhere down the line. Mining sector saw a 1.2% growth while electricity sector saw 4.4% growth. That was the largest increase since January 2017 and followed a 0.2 percent rise in December.

Earlier foreign brokerage Morgan Stanley had said retail inflation is expected to moderate and print at 5 per cent after rising consecutively for five months, helped largely by seasonal dip in vegetable prices, while trade deficit is also likely to improve.

The dogs that didn't bark were the United States dollar, virtually unchanged after the number, and the real (inflation-adjusted) USA 10-year yield, which is slightly down.

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