WPI inflation rises to 3.1 pc in January

Daniel Fowler
February 14, 2020

However, high inflation can pose a trouble as it deters consumers from buying.

Prices of airline tickets, health care, recreation, and education were significant contributors to inflation in January. Headline inflation refers to the overall number, while core inflation is the price rise, excluding food and fuel. A chart provided by Nicholas Reece, senior financial analyst and portfolio manager at Merk Investments, shows that market participants believe average inflation over the next 10 years will hover around 1.7 percent.

Wholesale prices based inflation rose to 3.1 per cent in January, as against 2.59 per cent in the previous month due to increase in prices of food articles like onion and potato. Outside the food and beverages category, inflation in "transport and communication" rose to 6.08% from 4.77% in December.

"This low interest rate environment may limit the ability of central banks to reduce policy interest rates enough to support the economy during a downturn", Mr. Powell said during his testimony.

But because they worked fewer hours, their weekly inflation-adjusted earnings showed "essentially no change" over the past year, the Labor Department said.

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A day after retail inflation shot up to a near six-year high, chief economic adviser (CEA) Krishnamurthy Subramanian played down fears of inflationary pressures building up in the economy and said prices are expected to soften in the months ahead as onion supplies improve. Prices were up 2.5% in January from a year earlier, the largest year-over-year increase since October 2018, according to the Labor Department.

The index for ' Non-Food Articles' group declined by 1.4 percent to 132.1 (provisional) from 134.0 (provisional) for the previous month due to lower price of floriculture (19%), castor seed and skins (raw) (1% each).

January PCE price data will be published later this month, which will provide further insight into how inflation is developing compared to Fed expectations.

Food prices posted an annual increase of 1.8% on a 3.1% jump in restaurant prices.

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