Finance

UK inflation reaches a 2 1/2-year high in January

UK inflation reaches a 2 1/2-year high in Januaryā€¯

The rate was lower than expected, with upward pressures partially offset by prices for clothing and footwear, which fell by more than they did a year ago.

The Labor Department said on Wednesday its Consumer Price Index jumped 0.6 percent last month after gaining 0.3 percent in December. The increase reflects the timing of the Lunar New Holiday which began in the final week of January.

The CPI (H) year-on-year reading which has a different methodology for housing costs and will become the benchmark rate from next month increased to 2.0% from 1.7% previously.

Month-on-month, consumer prices climbed at a pace of 1 percent after rising 0.2 percent in December.

Year over year, however, the figure was unchanged at 1.6 percent, unadjusted.

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Retail inflation cooled in January led by lower food prices for a second straight month.

It also last hit 2 percent in April 2012.

Gradually firming inflation and a tightening labor market could allow the Fed to raise interest rates at least twice this year.

However, the move came in shy of the Bank of England's 2 per cent target and economists' expectations of 1.9 per cent.

The price rise in China has further been augmented due to government efforts to cut overcapacity in various industrial sectors.

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It was well above the 6.3% increase expected, and followed a 5.5% lift in the year to December. The pace of food deflation has eased off for four consecutive months.

The PPI personal consumption rose solidly at 0.7 percent sequentially and 1.6 percent year-on-year.

In contrast, the inflation rate on January-on-January basis for pulses stood at 6.21 per cent, while wheat became expensive by 9.49 per cent and protein-based food items such as eggs, meat and fish became dearer by 3.59 per cent.

The cost of many other wholesale goods aside from energy are little changed, however, and the price of food, a big household expense, is flat compared with a year earlier.

Most of the major component indexes increased in January, with the indexes for apparel, new vehicles, motor vehicle insurance, and airline fares all rising 0.8 percent or more.

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