US inflation shock

PRICES in the US rose far more strongly than expected last month, shocking economists and raising the spectre of more rapid hikes to interest rates.

Underlying consumer prices index inflation was 1.8pc in January, the same as December – much higher than many on Wall Street had expected. It means the Federal Reserve could put rates up faster than the market is expecting, driving up the cost of debt and hitting the finances of companies and mortgage holders.

Economist Erik Norland of trading firm CME Group said: ‘This could be toxic for the equity market.’