The Labor Department said on Tuesday its Consumer Price Index rose 0.2 percent last month after jumping 0.5 percent in January. Food Price Index part of CPI also declines from 4.7 to 3.3 percent. The highlighted 2 percent level is the Federal Reserve's Core inflation target for the CPI's cousin index, the BEA's Personal Consumption Expenditures (PCE) price index. Economists were expecting to see a 0.2% rise in price pressures.
The country's industrial production, however, rose by 7.5% in January, backed by growth in manufacturing, consumer and capital goods sectors.
"Solid domestic economic momentum and the impulse from oncoming fiscal stimulus will underpin a gradual build in inflation toward the Fed's 2 percent target", said Gregory Daco, chief economist at Oxford Economics in NY.
(Kitco News) - Gold prices have turned positive on the day as markets digest a steady increase in US inflation pressures.
Capital goods also registered a healthy growth at 14.6 per cent in January, 2018 against a decline of 0.6 per cent past year.
US consumer prices continued to firm in February, indicating inflation is creeping up toward the Federal Reserve's target without the kind of breakout that would warrant a faster pace of interest-rate hikes. In fact, the exceptional 1.7% increase in prices for clothing observed in January - the highest monthly increase since February 1990 - was probably owed to the winter weather, whereas price discounts were more likely again in February given the mild temperatures.
The Consumer Price Index data will be released shortly at 12:30 GMT, and have an impact on the broad markets globally.
The index surged 1.5 per cent on Monday following firm U.S.jobs numbers on Friday, while low wage growth eased concerns about inflation and faster central bank rate hikes.
On Wednesday, the Labor Department is scheduled to release a separate report on producer prices in the month of February. Both were lower than in January. Price increases have largely remained below that goal in recent years. Expected Moderation in Core Index Although core inflation was flat at 12.09% YoY in January, it masked a 0.68% month-month growth (vs. 0.59% in December 2017).
Analysts polled by Reuters had predicted February´s rate would ease to 4.8 percent from 5.1 percent in January.
The IIP growth in January this year was mainly on account of an uptick in the manufacturing sector which constitutes 77.63 per cent of the index. Even at the use based classification the growth is broad based as with the exception of intermediate goods all other segments have shown growth either in high single digit or greater than high single digit.