U.S. wholesale prices rose in January, led by gasoline

Andrew Cummings
February 17, 2017

The CPI has remained above 3 percent for 11 consecutive months and was also higher than the national figure for 37 months in a row.

Chris Williamson, chief business economist at IHS Markit, said the Bank of England's 2.0 percent target for inflation looks likely to be breached in the months ahead.

Higher gasoline prices were a major driver behind the rise in inflation, as prices surged 7.8% in January, contributing to almost half of the rise in the headline CPI number. Excluding gas and autos, retail sales rose 0.7% month-on-month in January versus a prior 0.1% rise and beat an anticipated 0.3% increase.

The economy's strengthening outlook was also bolstered by other data on Wednesday showing manufacturing and mining production rising last month as the drag from lower oil prices fades.

In January 2016, the print was (-) 1.07 percent.


Inflation in Britain rose at the fastest pace in over two-and-a-half-years in January, although slightly less than analysts had expected, as the cost of fuel and food increased markedly.

Higher gasoline, apparel, and new auto prices led the gains.

The Fed has a 2 percent inflation target and tracks an inflation measure which is now at 1.7 percent.

In addition, Boston Fed President Eric Rosengren, a long-time dove who last year switched tack and began pushing for tighter monetary policy said the central bank may need to raise interest rates a bit more aggressively than the thrice-per-year pace forecast by policymakers.

TOKYO, Feb 16 The dollar took a breather on Thursday after climbing to a one-month high as a run of upbeat USA economic data rekindled expectations of an early rate hike by the Federal Reserve. The CPI normally drops in January as a result of a normal seasonal pattern, in which mainly clothing and footwear prices decrease. Economists polled by Reuters had forecast retail sales ticking up 0.1 per cent and core sales gaining 0.3 per cent last month.


The Federal Reserve said in a separate report that factory output rose 0.2 percent in January, its second straight increase. The yield on the 30-year Treasury bond TMUBMUSD30Y, +0.92% rose 4.8 basis points to 3.103%.

The dollar surged in the month after Trump's election on November 8 on expectations he would deliver tax reforms and increase infrastructure spending, reflating the US economy and spurring the Fed to more dramatic action.

Sterling's post-Brexit fall has added to inflation but the pound fell today as economists were braced for an even bigger rise in the cost of living. Inflation is getting closer to the Fed's goal. Core inflation rose 2.3 percent over the last 12 months.

Inflation in the "fuel and power" basket more than doubled to 18.14 percent in January, up from 8.65 percent in the previous month.


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