US Consumer Prices Rise In Line With Estimates In February

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Tuesday, the U.S. Labor Department said its U.S. Consumer Price Index rose 0.2% in February, after increasing 0.5% in January. Food Prices Remain Elevated The less than expected decline in inflation rate in January was due to the upward pressure from the cost of food items, as food inflation rose by 0.87% to a twelve-month average of 19.62%, the highest since 2009. Core prices - which exclude the volatile food and energy categories - also climbed 0.2 per cent. Moreover, core inflation is sticky at around 5 percent, while an imposition of more tariffs on some imports like mobile phones is likely to boost price pressures, giving the RBI more ammunition to wait and watch.

The inflation on the basis of Consumer price index (CPI) and Wholesale Price Index (WPI) was at 5.21% and 3.58%, respectively, in December 2017. (NASDAQ: NFLX) +4.5 percent, Alphabet Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) +3 percent, Microsoft Corporation (NASDAQ: MSFT) +2.2 percent, Inc (NASDAQ: AMZN) +1.75, Apple Inc (NASDAQ: AAPL) +1.7, and Facebook Inc (NASDAQ: FB) +1.6 percent. A stronger than expected inflation report could be the catalyst that drives prices out of the current trading range. The decline was supported by a sharp moderation in vegetable inflation to 17% in February 2018 against 27% in January 2018 and a continuous dip in pulses and products inflation. The index rose 1.8% for the 12 months ending in February.

Meanwhile, riding on the back of robust manufacturing sector output, India's industrial production sustained the growth momentum to rise 7.5 percent in January, indicating early signs of industrial revival.

In January, manufacturing grew by a robust 8.7 per cent, followed by 7.6 per cent increase in electricity generation. A weakening dollar and fiscal stimulus in the form of a $1.5 trillion tax cut package and increased government spending are also seen spurring inflation.

The mining sector, however, registered negligible growth of 0.1 per cent, as compared to 8.6 per cent rise in January previous year.

Gasoline prices fell 0.9 percent in February after rebounding 5.7 percent in January. "Although a year ago we faced a disconnect between the continued strengthening in the labor market and the step-down in inflation, mounting tailwinds at a time of full employment and above-trend growth tip the balance of considerations in my view", Fed Governor Lael Brainard said last week. Used vehicle and trucks prices declined after four straight monthly increases.

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