U.S. inflation rise as consumer prices surge in January surpassing expectations

Market - Mohit Shah - Feb 15,2018

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us inflation rise as consumer prices surge in january surpassing expectations

US consumer prices rose faster than expected in January, a sign of firming inflation that bolstered expectations of higher interest rates.

It was analyzed that, U.S. consumer prices grew more than expected in the month of January. This was due to more payments towards gasoline, healthcare and rental accommodation by the Americans; these factors have raised pressure on the newly appointed Federal Reserve chief Jerome Powell to curb any possible trouble in the economy.

On Wednesday, a report issued by the Labor Department overstated that inflation comes in the picture as price gains for apparel and motor vehicle insurance, are analyzed to be unsustainable.

Furthermore, bond yields mounted higher on Wednesday, however, market reaction to the inflation report kept silent.

Economists have been persistent with their estimation regarding higher inflation across the U.S., as a result of stronger economic growth together with low unemployment. However, last year these expectations were puzzled as relatively soft inflation trailed the roughly 2% mark set by the Federal Reserve.

Termed as the ‘base effects’, they will turn favorable in March. As per economists, the course might get a significant flow with higher annual inflation stats. In addition, the average hourly earnings soared 2.9 percent on an annual basis as recorded in January; it is the largest growth since June 2009.

Further, a weakening dollar can also put pressure on inflation. To be precise, rising inflation can hurt consumer spending that is already highlighting slowing indications.

On Wednesday, a separate report launched by the Commerce Department revealed that retail sales fell 0.3 percent last month. It is the largest dip since February 2017.