Raising interest rates helps put the brakes on surging inflation.
The yield on 10-year Treasuries rose to 2.86 percent, while US stock futures fell, as the figures renewed investor concerns that the Federal Reserve will raise interest rates at a faster pace than anticipated. Analysts are hyper-focused on whether faster price increases may cause the Federal Reserve to raise short-term interest rates faster than expected. After its December 2017 meeting, the central bank said it was planning three more such hikes in 2018. "Inflation expectations have been rising, and investors are anxious about an upside surprise". "A significant acceleration in inflation is something to worry about in 2019".
Consumer food prices rose 4.70 percent in January, compared with 4.96 percent in December, as prices of pulses fell 20.19 percent from a year earlier.
The IIP had grown at 2.4 per cent in December 2016. Excluding volatile food and energy prices, the index was up 0.3 percent against estimates of 0.2 percent, the Labor Department reported.
Sterling jumped to as high as US$1.3924 after the data, up from US$1.3886 beforehand. However, this was at odds with the one year ahead measure and the longer-term measures of inflation expectations, which were all broadly steady. Economists also expect the increase in the annual core PCE index slowed down in January from 1.5 percent in December. January data are due for release on March 1.
After rising to a 17-month high in December, retail inflation moderated to a two-month low of 5.07 per cent in January aided by lower rate of food inflation.
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Once again, the Garden State happens to sit on the warmer side of the storm and will get a decent soaking of rain , Chabala said. A multi-vehicle crash that closed a stretch of eastbound Interstate 94 near Ann Arbor, but no severe injuries were reported.
This assumes that the economy will see steady, middle of the road growth around 0.4% quarter-on-quarter, wage growth will pick up gradually and inflation will ease back as the year progresses, he added.
"Wages are a small part of the total cost of a good", said Marc Chandler, chief currency strategist at Brown Brothers Harriman in NY.
There were also weaker drops in the price of clothing and air fares compared with the same month previous year. As noted, apparel explains 6/10ths of the difference between the actual and predicted core CPI number.
The core CPI has tended to increase at the start of the year likely as businesses test their pricing power.
Used vehicle prices will change to a single month price change from a three-month moving average.
Economists have also stated that aside from supporting interest rates being pushed higher in the near future, inflation may also possibly take over from the price increases related to the British pound seen by the market after the Brexit vote which would lead to growing acceptance for a monetary policy tightening.