Producer Prices Jump 0.6%, Biggest Gain Since September 2012

Figures released by the U.S. Labor Department said on Tuesday its producer price index for final demand jumped 0.6% last month, the biggest hike since September 2012 and followed a 0.2% rise in December.

The rate in January 2017 was the highest since June 2014 and was fuelled by rising prices for motor fuels and to a lesser extent food prices.

Consumer Food Price Inflation (CFPI) declined sharply to 0.53 per cent in January as against 6.85 per cent in January 2016 and 1.37 per cent last month.

SCOTTISH Chambers of Commerce has highlighted the "danger" for businesses that they will be forced to pass on higher costs to customers at a hard time, after official figures showed a further rise in United Kingdom consumer price inflation. "Therefore, given a continued increase in crude oil prices, the fuel and power prices could rise further with government deciding to keep the subsidy levels unchanged in the 2017-18 budgets". The WPI for January'17 is significantly higher than the WPI of (-) 1.07% for the corresponding month past year.

Chris Williamson, chief business economist at IHS Markit, said the sustained rise in inflation was unlikely to spark the Bank of England into raising rates. Data released on Monday showed consumer inflation fell to a five-year low of 3.17% because of weak food inflation, but it is expected to ight in the index, rose to 3.99% in January from 3.6% in the previous month.




"With the dollar strengthening further against the currencies of the United States' main trading partners and wage growth still moderate, the spillover to consumer inflation from rising commodity prices is likely to be limited", Reuters predicted.

Looking ahead, both consumer and producer prices are expected to peak soon, as "the base effects that have boosted inflation in recent months are soon going to go into reverse", Julian Evans-Pritchard of Capital Economics said in a note. Overall, vegetable prices came down by (-) 32.32 per cent.

The DIPP also revised upward inflation estimate for November to 3.38% from the earlier provisional estimate of 3.15%.

Last month's inflation, down from 5.69 per cent in January 2016, was lowest in at least over three years.

In pulses and products category also, the rate of price rise was negative at (-) 6.62 per cent.

(Copyright © 2015. All Rights Reserved.)
 
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