Tuesday, 02 June, 2020

Wholesale Inflation Rose to 3.1% in January, Highest in Last Eight Months

Retail Inflation Hit 7.59% in January Highest Since May 2014 A vendor sleeps as his son waits for customers at their roadside vegetable shop in New Delhi
Ginger Lawrence | 14 February, 2020, 15:21

This is the highest inflation figure in last eight months. Along with the indexes for shelter and medical care, the indexes for apparel, recreation, education, and airline fares all increased in January. The core PCE price index rose 1.6 percent on a year-on-year basis 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.

Chief Economic Advisor Krishnamurthy Subramanian on Thursday said that he expects consumer price index (CPI)-based inflation to come down to sub-4.5 per cent levels by July, a day after headline inflation was stated to have touched its highest level in 68 months.

Food inflation last month was 13.63%, compared with (-) 2.24% in January 2019.

Consumer inflation is running close to the Federal Reserve's 2% annual target.

As for non-food articles, prices declined 1.4 per cent from the previous month due to lower price of flori-culture, castor seed and skins, raw.

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Workers' inflation-adjusted hourly earnings rose 0.1% in January after falling 0.1% in December. It was at 1.97% for the corresponding period of previous year.

Vegetables remained costly, showing a 50% inflation rate, despite the recovery in onion prices.

"We are in the midst of the longest expansion on record, and despite labor market strength, the Fed has still been unable to hit its inflation target", Sukholitsky said. Data for January is to be published later in February.

In his remarks, Powell also specified several "important longer-run challenges" that the USA economy faces, namely relatively low labor force participation by people in their prime working years and weak productivity growth. "Of the difference of 3.4 per cent, about 2.45 per cent, or 70 percentage points, comes just from onion", he said, adding a moderation in onion prices was expected after a fresh harvest in March.

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