Sunday, 21 January, 2018

Falling energy prices hold U.S. consumer inflation to 0.1% in December

Retail inflation jumps to 5.2% dashes hopes of repo rate cut Core Inflation Accelerates As Shelter Costs Jump
Nellie Chapman | 12 January, 2018, 17:02

The Reserve Bank of India held its policy rate steady at 6 per cent last month and said all possibilities were on the table, depending on how price pressures and growth panned out.

The uptick by the consumer price index was primarily due to an increase in shelter costs, which rose by 0.4% in December after edging up by 0.2% in November.

Over the past 12 months, overall inflation is up 2.1 percent while core inflation, which excludes volatile food and energy costs, rose 1.8 percent.

The cumulative CPI inflation was lower at 3.25% in April-December FY2018 compared with 4.85% in April-December FY2017.

On the other hand, the report showed a steep drop in energy prices, which slumped by 1.2% in December after spiking by 3.9% in November.

Analysts polled by Reuters had forecast December's CPI inflation to rise to 5.10 per cent from November's 4.88 per cent.

The RBI, which has a medium-term inflation target of 4 per cent, has raised its inflation estimate to 4.3 per cent to 4.7 per cent for the six months through March. The US central bank hiked borrowing costs three times in 2017.

Weak import and producer price reports this week had raised concerns about the inflation outlook, although the two reports do not have a strong correlation with the CPI data.

Households also paid more for new motor vehicles, which rose 0.6% in price last month, the biggest gain since January.

USA energy prices were up sharply a year ago compared to 2016, with petrol rising almost 11% and fuel oil up more than 15%.

The December increase in consumer prices followed a sharper 0.4 per cent increase in November, the Labor Department reported Friday. Inflation saw moderate rise in case of cereals and pulses. Economists had expected prices to rise by 0.2%.