The consumer prices of U.S rose sharply in January, triggering the largest annual advance in the inflation in 40 years, which could encourage speculation by financial markets about a rise in interest rate of 50 basic points next month, when those responsible for the monetary policy of the Federal Reserve.
index consumer prices rose 0.6% last month after advancing 0.6% in December, the work Department. In the 12 months through January, the CPI jumped to 7.5%, the highest year-on-year rise since February 1982.
The figure followed a 7.0% advance in December and was the fourth consecutive month of annual increases of more than 6%. Economists polled by Reuters had forecast that the CPI it would rise 0.5% and accelerate to 7.3% year-on-year.
The economy is dealing with a runaway inflationcaused by a change in spending services to goods during the covid-19 pandemic.
Trillions of dollars in pandemic aid skyrocketed spending, which faced capacity constraints as the coronavirus it kept out workers needed to produce and transport goods to consumers.
Skyrocketing inflation has reduced household purchasing power and eroded the president’s popularity Joe Bidendespite the economy growing at its strongest rate in 37 years in 2021 and the labor market rapidly creating jobs.
The Fed is expected to start raising rates in March to control inflation, which has exceeded the central bank’s 2% target. Financial markets see a 50% chance of a 50 basis point increase, according to the latest stock prices. futures rates in the united states.
Market predictions are driven in part by the fact that price pressures are widening, with various measures of wage inflation rising in recent months.
Many economists, however, believe that the fed act so aggressive. Some estimate that the central bank will raise rates by 25 basis points at least seven times this year.
“The Fed does not want to create undue volatility in its first rate hike, which will only make increases more difficult,” he said. Scott Ruesterholz, portfolio manager at Insight Investment in New York. “Rather, the Fed is more likely to guide an accelerated pace of hikes in back-to-back meetings to crack down on inflation.”
Strong underlying inflation
Excluding volatile food and energy components, the CPI rose 0.6% last month after rising 0.6% in December. In the 12 months to January, the so-called core CPI jumped 6.0%, the biggest year-over-year gain since August 1982, and followed a 5.5% advance in December.
Rising rents and shortages of goods like motorized vehicles are fueling the Core CPI. The monthly inflation could ease in coming months as supply bottlenecks ease as COVID-19 infections decline Omicron variant.
A separate report from work Department indicated Thursday that initial claims for state jobless benefits fell by 16,000 to a seasonally adjusted figure of 223,000 for the week ending February 5.
Economists had forecast 230,000 applications for the last week. Claims increased from early January to mid-month as the omicron variant spread across the country.
Subsidy requests have fallen from an all-time high of 6.149 million in early April 2020.