US January Consumer Prices Rose 0.6%, Largest Monthly Gain Since 2013

The weaker pound, combined with higher global oil prices, pushed inflation in January to 1.8 percent, its highest level since mid-2014, official data showed on Tuesday.

Food prices showed the smallest annual decrease since July 2014 as the cost of chocolate and candies rose by nearly five per cent on the month.

Core inflation that excludes energy, food, alcoholic beverages and tobacco, held steady at 1.6% in January.

But it was below a forecast for 1.9% in a Reuters poll of economists, as falling clothes prices offset some of the upward pressure on inflation from fuel and food.

However, Nossek does not expect inflation to reach much higher than 2 per cent as he believes the oil price lacks momentum - despite production cuts from Opec and non-Opec nations.

Fuel prices hit a two-year high in early February, according to the RAC. Prices for imported materials surged 20.2% on the year last month-the fastest rate of growth since September 2008.

"The drivers of this expectation to our minds are the weakness of sterling, noting that month-on-month prevailing hedges are differentially by company coming to their fruition, rising commodity prices and the natural inclination for more businesses than not to seek to make the most of an easing deflationary environment".

"The latest rise in CPI was mainly due to rising petrol and diesel prices, along with a significant slowdown in the fall in food prices", ONS statistician Mike Prestwood said. "This is the highest it's been since June 2014".

The prices in this category had risen by 3.67 per cent in December.

Last week BoE rate-setter Kristin Forbes said she was beginning to become uncomfortable with the central bank's commitment to a neutral policy stance, arguing instead that interest rates could need to rise soon if price pressures continue to build.

ALSO READ: India Wholesale Price Inflation Rises To 3.39%. Julian Evans-Pritchard, an economist at Capital Economics, said the base effects that have boosted annual price gains in recent months are soon going to go into reverse. Even excluding the more volatile categories of food and energy, prices were still up by nearly as much at 2.3 percent. Cleveland had the lowest rate, at 1.6 percent.

  • Zachary Reyes