US inflation increases and weekly jobless claims at 48-year low

Consumer prices in the United States increased in the month of January with an estimate of inflation which is posted in the largest rise in the past twelve months of time which in turn strengthened the views that prices will go up this year. Inflation is most likely to get a boost from the labor market which has strengthened. On Thursday, another set of data showed that the number of residents of the United States filing for unemployment benefits in the previous week fell to its lowest level in the same time period of 48 years. A very strong and healthy labor market and increasing inflation could result in forcing the Federal Reserve to raise interest rates with a lot more aggression as compared to what is currently anticipated for the prevention of the economy from being heated up.

The Federal Reserve has already forecasted three rate hikes for 2018. The financial markets of the United States in this month have priced in a rate increase. The Commerce Department mentioned that consumer prices which is measured by personal consumption expenditures price index increased by 0.4 percent which actually was the largest increase since the month of September in the previous year. This particular increase was followed by a 0.1 percent gain in the month of December. In the total of twelve months last year, personal consumption expenditures went up by about 1.7 percent after a similar gain in the month of December.

In the month of January, personal consumption expenditures went up by 0.3 percent excluding food and energy components which are actually are at their largest gain since the month of January 2017. Personal consumption expenditure went up by 0.2 percent in December. Some of the unfavorable base effects kept the annual increase in personal consumption expenditures price index at the rate of 1.5 percent in the month of January. The gains in the rate of inflation were at par with the expectations of economists. The core personal consumption expenditures price index is the preferred inflation measure of the Federal Reserve and has undershot the target of the central bank of the United States by two percent since the middle of the year 2012. The value of the dollar went up after this particular data while the treasuries of the United States reduced gains.

January 16, 2022 - 17:21
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