Industrial output up 7.1% in Dec; inflation eases in Jan

Marcus Newton
February 14, 2018

Viewed another way, though, inflation may be higher: A 0.2 percent monthly rise in the same index, as economists forecast, would result in a three-month annualized rate of 2.3 percent, according to analysts at Wells Fargo Securities. The steep increase was driven by a surge in ticket prices for museums and zoos, where inflation surged from 1.4pc in the 12 months to December to 5.3pc in January. The 1.8 percent increase in core prices is still below the Fed's 2 percent target.

The CPI, which measures inflation, started increasing by 15.13 per cent (year-on-year) in January 2018.

RLA Policy Director, David Smith, said: "Today's figures show that rent controls are unnecessary and would act against the interests of tenants by making them worse off".

USA consumer prices rose by more than projected in January as apparel costs jumped the most in almost three decades.

In December, the capital goods segment grew by 16.4 per cent against a contraction of 6.2 per cent in the same month a year ago.

Dr Soumya Kanti Ghosh, Group Chief Economic Adviser at State Bank of India (SBI), however, said, "Inflation for the Jan'18-Jun'18 period is likely to be on the higher side owing primarily to base effect (average inflation for Jan'17- Jun'17: 2.89%)".

The Bank of England monetary policy committee warned last week that, partly due to stronger worldwide economic demand, United Kingdom rates would have to rise sooner and to a "greater extent" than previously anticipated.

United Kingdom inflation remained stable in January as downward pressure from auto fuel and food prices was offset by upward effect from recreational and cultural goods.

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The BoE surprised financial markets last week by indicating that rates could move up faster than previously expected, as the Bank wanted to bring inflation back to its target of two percent within two years rather than three.

Yet many economists and market strategists believe the fears about inflation are overdone. Vegetables prices grew almost 27 percent in January as compared with 29.13 percent a month ago.

The trio at Edelweiss further said that November 2017 IIP stood at near 5-year high.

Economists surveyed by MarketWatch had forecast a 0.4% increase.

If we exclude vegetables, inflation was 150 basis points lower at 3.7%, as per Motilal Oswal data.

With the January inflation report, the government incorporated some methodology changes.

On CPI data, Ind-Ra said the inflation and inflationary outlook suggest that on policy rate RBI is likely to remain in a pause mode at least during the first half of 2018. Price pressures are also seen being fanned by fiscal stimulus in the form of a $1.5 trillion United States tax cut package and increased government spending.

Other reports by MaliBehiribAe

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