United States Consumer Price Index Rises At A Slower Pace In February

Cornelia Mascio
Marzo 14, 2018

Over the last 12 months, the all items index rose 2.2% before seasonal adjustment.

In January, manufacturing grew by a robust 8.7 per cent, followed by 7.6 per cent increase in electricity generation.

Separate data showed industrial production rose 7.5% in January, handily beating estimates of a 6.4% rise and a growth of 7.1% in December. IIP grew at 4.1 per cent in April-January this fiscal compared with 5 per cent in the same period of the previous financial year.

Consumer food prices rose 3.26 percent in February, compared with 4.70 percent in January, as prices of pulses fell more than 17 percent from a year earlier. The strength of the 30-year reopening in spite of the $1 billion increase in supply suggests firm demand for long-dated bonds, and spurred additional bond buying in the open market.

Last month's increase in consumer prices was in line with economists' expectations.

USA consumer prices increased marginally in February amid a decline in gasoline prices and a moderation in the cost of rental accommodation, the latest indication that an anticipated pickup in inflation likely will be only gradual.

As per use-based classification, the growth rates in January 2018 over January 2017 are 5.8 percent in primary goods, 14.6 percent in capital goods, 4.9 percent in intermediate goods and 6.8 percent in infrastructure/construction goods.

"The eventual rabi harvest, distribution of the 2018 monsoon and the operationalization of the proposals made in the Union Budget for FY19, including the launch of Operation Greens and the augmentation of minimum support prices, would impact the trajectory of food inflation going forward", she added.

Commenting on the IIP numbers, industry chamber Assocham described these as signs of "an underlying pick-up in the growth trajectory".

Terming it as a "challenging period" for the central rate setting panel, Japanese brokerage Nomura said the rising MSPs are a risk and once inflation starts rising from the second quarter, the apex bank would turn more hawkish. "This is the third consecutive month in which factory output has clocked a high single digit growth". Manufacturing alone constitutes 77.63 per cent of the index.

A survey of small businesses published on Tuesday showed the share of owners reporting higher selling prices in February hit its highest level since July 2014.

The consumer durables and consumer non-durables have recorded growth of eight percent and 10.5 percent respectively. It was much lower at 2.01 per cent in February 2017. In a report authored by SBI Group Chief Economic Adviser, Dr. Soumya Kanti Ghosh, the state-owned lender said the 7.5 percent jump was due to steep growth in manufacturing and electricity.

"Looking ahead, we expect that industrial performance would be on a clear up-slope with both consumption and investment picking up pace during the year", CII Director General Chandrajit Banerjee said.

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