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US CPI rises at fastest in over 1 year
Source: Agencies |
February 18, 2011, Friday
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Print Edition
Print Edition
UNITED States core consumer prices rose at their quickest pace in more than a year in January, but the increase was not strong enough to suggest a troubling build-up in inflation pressures.
The US Labor Department yesterday said its core Consumer Price Index, excluding food and energy, rose 0.2 percent - the largest gain since October 2009. The index rose 0.1 percent in December.
The increase in the core rate, which was above economists' expectations for a 0.1 percent gain, was driven by rises in the cost of apparel, shelter and airline fares. The rise suggests the disinflationary trend in core inflation has bottomed.
The still soft inflation scenario was supported by a rise in applications for unemployment benefits last week, which suggested the labor market recovery would remain gradual, restricting wage growth.
"It is in line with our view that the disinflation process bottomed in the fourth quarter. We do not see pricing power being passed along yet," said Michael Gapen, a senior US economist at Barclays Capital in New York.
Overall CPI rose 0.4 percent after gaining by the same margin in December. Food and energy accounted for over two-thirds of the rise in overall CPI.
Economists had expected headline CPI to rise 0.3 percent last month.
The report came a day after the government reported core wholesale prices increased at their fastest pace in more than two years in January, raising concerns among some investors that inflation might be building up.
Despite the slightly above expectations rise in January, the consumer inflation report tended to support the Federal Reserve's views that inflation remains too low.
This is in stark contrast to other economies, where surging commodity prices have put central banks on the alert for inflation. The January consumer inflation report showed prices for new vehicles and used cars declining.
In a second report, the Labor Department said initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 410,000, partially reversing the prior week's hefty decline.
The four-week moving average of unemployment claims - a better measure of underlying trends - rose 1,750 to 417,750 last week.
The US Labor Department yesterday said its core Consumer Price Index, excluding food and energy, rose 0.2 percent - the largest gain since October 2009. The index rose 0.1 percent in December.
The increase in the core rate, which was above economists' expectations for a 0.1 percent gain, was driven by rises in the cost of apparel, shelter and airline fares. The rise suggests the disinflationary trend in core inflation has bottomed.
The still soft inflation scenario was supported by a rise in applications for unemployment benefits last week, which suggested the labor market recovery would remain gradual, restricting wage growth.
"It is in line with our view that the disinflation process bottomed in the fourth quarter. We do not see pricing power being passed along yet," said Michael Gapen, a senior US economist at Barclays Capital in New York.
Overall CPI rose 0.4 percent after gaining by the same margin in December. Food and energy accounted for over two-thirds of the rise in overall CPI.
Economists had expected headline CPI to rise 0.3 percent last month.
The report came a day after the government reported core wholesale prices increased at their fastest pace in more than two years in January, raising concerns among some investors that inflation might be building up.
Despite the slightly above expectations rise in January, the consumer inflation report tended to support the Federal Reserve's views that inflation remains too low.
This is in stark contrast to other economies, where surging commodity prices have put central banks on the alert for inflation. The January consumer inflation report showed prices for new vehicles and used cars declining.
In a second report, the Labor Department said initial claims for state unemployment benefits increased 25,000 to a seasonally adjusted 410,000, partially reversing the prior week's hefty decline.
The four-week moving average of unemployment claims - a better measure of underlying trends - rose 1,750 to 417,750 last week.
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