Inflation hits highest levels since 2014 as fuel costs soar
- Author: Wendy Palmer Feb 16, 2017,
Feb 16, 2017, 0:57
Retail price inflation - tracked by British inflation-linked government bonds and many commercial contracts - also rose to its highest since June 2014 at 2.6 percent.
The Labor Department said Wednesday consumer prices rose 0.6 percent last month, the most since February 2013, and twice what economists were expecting.
Inflation reached a two-and-a-half-year high in January as food and fuel prices pushed up the cost of living.
But it is unlikely that the latest inflation numbers will have a significant impact on either the commercial or residential property markets, "at least not in the short term", according to Agate Freimane, senior investment director at BrickVest.
Global crude oil prices are up almost 18 percent since end-November, while the rupee is expected to weaken by almost 4 percent from its current levels to 69.50 a dollar in 12 months.
Although this is lower than many economists' expectations of a 1.9% rise in prices, it marks the third consecutive monthly inflation increase since October, with the trend expected to continue. Stripping energy and food, personal consumption rose 0.4 percent month-on-month and 1.2 percent year-on-year.
The wholesale inflation for food articles declined by (-) 0.56 per cent during the month under review from (-) 0.70 per cent in December and 6.46 per cent recorded for January, 2016. The annual rate was also faster than the expected 6.6 percent. Fuel inflation was 8.65% in December.
Overall food prices were flat between December and January after falling 0.6 per cent a year ago, as the sharp drop in grocery costs, triggered in part by the supermarket price war, ground to a halt. "Higher global commodity prices will get ingrained in these components while food items will be unaffected", it said in its CPI inflation report. Data released by statistics department on Monday showed India's retail inflation decelerated in January to 3.17% from 3.41% a month ago as prices of vegetables and pulses fell further.
While the rate of price rise in sugar was 22.83 per cent, for fibres, it was 15.18 per cent, and 25.44 per cent for minerals. "However, on a month-on-month basis, PPI growth moderated in January, suggesting the inflation momentum may not be as strong at first glance".