U.S. wholesale inflation sees biggest monthly gain in 4 years

Prices of vegetables and pulses contracted 15.62% and 6.62% in January

Consumer price inflation set to see upside pressure: Crisil

Advertisment Inflation at the wholesale level in the United States rose more than expected in January, recording its largest gain in four years amid increases in the cost of energy products and some services, even though a strong USA dollar continued to keep underlying inflation tame.

Consumer prices increased by 1.8 per cent compared with a year earlier, picking up from 1.6 per cent in December, and prices paid by factories jumped by more than 20 per cent.

Producer price index, which measures price changes before they reach consumers, increased 0.6 percent between January and December, the Labor Department said Tuesday.

That has sparked talk of tighter monetary policy, though consumer inflation in China is believed to be still well within the central bank's comfort zone.

The dollar index, which measures the greenback against its six major peers, was last up 0.2 percent at 101.43, its highest since January 20.

The 12-month rate for food prices was still negative, down 1 per cent, but that marked its highest level since July 2014.

United States wholesale inflation continued its upward trend in January, recording its largest monthly gain in more than four years, according to data released Tuesday by the Labor Department.

The Australian dollar traded at $0.7722, up 0.1 percent on the day.

In January alone, food prices increased by 2.3%, led by a 3.4% jump in pork prices, a staple of the Chinese diet.

"The continued rise in inflation will squeeze consumer spending and dampen growth in 2017 and 2018, but despite this we still expect GDP to rise by around 1.5 % this year and next".

The ONS noted prices for motor fuels had risen by 3.4 per cent between December and January, in contrast to a 2.6 per cent fall a year earlier. The figure also matched preliminary report.

It means a basket of goods and services priced at £100 a year ago would now cost £101.90. BoE Governor Mark Carney this month warned of "twists and turns" ahead as Prime Minister Theresa May starts two years of formal Brexit talks.

Petrol rose to 118.6p per litre in January, up from 114.6p the previous month, and 101.8p in January 2016.

Inflation is widely expected by economists to rise if US President Donald Trump carries out even a relatively small portion of his campaign promises of a trillion-dollar boost to government investment.

The ONS said a rise in the cost of imported foods caused by the Brexit-hit pound may have been a factor that caused the fall in food prices to slow.

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