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Concerns about US inflation.

 The con­sumer price index has registered a smal­ler decline than expec­ted for Janu­ary, height­en­ing wor­ries over the

Fuel price

per­sist­ence of infla­tion. Eco­nom­ists expec­ted a decel­er­a­tion in the annual CPI to 6.2 per cent from the 6.5 per cent pace recor­ded in Decem­ber, accord­ing to the con­sensus fore­cast pub­lished by Reu­ters. Strip­ping out energy and food prices, the «core» CPI meas­ure rose at an annual rate of 5.6 per cent in Janu­ary, also slightly below the 5.7 per cent rise the pre­vi­ous month. This com­pared with eco­nom­ists’ expect­a­tions of a 5.5 per cent gain in the year-on-year meas­ure.


The Janu­ary infla­tion data was being closely watched as vital guid­ance to investors, eco­nom­ists and US cent­ral bankers. An unex­pec­tedly strong jobs report for last month stoked expect­a­tions that the Fed­eral Reserve might have to be more aggress­ive in tight­en­ing mon­et­ary policy to cool the eco­nomy. The S&P 500 share index was 0.3 per cent higher in early trad­ing. The tech­no­logy-heavy Nas­daq Com­pos­ite was up 0.6 per cent.

The two-year Treas­ury yield, which closely tracks interest rate expect­a­tions, was up 0.05 per­cent­age points to 4.58 per cent, reflect­ing a decline in price. On a monthly basis, the CPI rose 0.5 per cent last month against 0.1 per cent in Decem­ber. The «core» meas­ure increased at an unchanged pace of 0.4 per cent. Energy prices rose 2 per cent on a monthly basis, while food and cloth­ing costs rose at a faster pace than the pre­vi­ous month.

Hous­ing costs rose at a pace of 0.7 per cent, slightly slower than in Decem­ber but still a rapid clip for a cost that rep­res­ents a big chunk of dis­pos­able income for many house­holds. The Fed has raised interest rates from near-zero to a tar­get range of between 4.5 and 4.75 per cent over the past year. As infla­tion has eased since peak­ing last sum­mer, the cent­ral bank has slowed the pace of rate rises, from 0.75 per­cent­age points and 0.5 per­cent­age points in the second half of last year to 0.25 per­cent­age points last month.
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