US inflation hits fastest pace in 4 years
WASHINGTON: US consumer prices in January rose at their fastest pace in nearly four years, a fresh sign the economy may finally see faster inflation, the Labour Department reported.
The consumer price index (CPI) rose 0.6 per cent, the third consecutive monthly acceleration and the largest increase since February 2013.
The CPI also posted its largest 12-month increase in nearly five years, rising 2.5 per cent compared to January 2016.
Almost half of the monthly increase was driven by rising fuel prices, with gasoline prices at the pump up nearly eight per cent. The energy index also saw its largest 12-month gain since November 2011, adding nearly 11 per cent.
Excluding the more volatile categories of food and energy, prices were up 2.3 per cent yearover-year, nearly the same as the overall rate, while there was a 0.3 per cent rise for the month.
The new figures may support the US central bank’s expectation that it will need to tighten monetary policy about three times this year after a decade of nearzero interest rates.
US wholesale inflation, prices seen from the seller’s perspective, likewise saw their largest monthly gain in more than four years, according to data released earlier this week.
Federal Reserve Chair Janet Yellen in congressional testimony reaffirmed that an increase in the benchmark lending rate was on the horizon and signalled they could come at any time.
Her comments cemented the view among analysts and market players that another rate hike could happen as soon as the next Fed meeting on March 14-15.
Within the CPI, prices housing, clothing and new also rose.
“It is obvious that consumer prices have gained momentum in recent months,” Chris Christopher, director of consumer economics at IHS Global Insight, said in a client note. “This is not the best thing in the world for lower income households living paycheck-topaycheck.” for cars