United States consumer prices rose a modest 0.2 percent in February

United States consumer prices rose a modest 0.2 percent in February

Inflation for the fuel and light category was at 6.80 per cent in February (against 7.73 per cent in January).

Meanwhile, the industrial output grew by 7.5% in January.

A report released by the Labor Department on Tuesday showed consumer prices in the United States increased in line with economist estimates in the month of February. In February 2017, however, it was 3.65 per cent. Inflation in vegetables was 17.57 per cent in February against 26.97 per cent in January.

Clothing prices rose sharply for the second straight month in February, and rents, vehicle insurance and airline fares also increased.

Strong inflation numbers in January had sparked fears that price pressures were accelerating, leading financial markets to expect a more aggressive pace of interest rate increases from the Federal Reserve than is now anticipated.

Retail inflation still remained above the 4 per cent medium-term target of the Reserve Bank of India (RBI), strengthening views that it will hold rates steady at its April meeting rather than raise them.

The food index was unchanged, while prices for food at home decreased 0.2%. But faster wage growth should begin to show up this spring, reflecting recently announced wage hikes from Walmart (WMT), Target (TGT), CVS Health (CVS) and Starbucks (SBUX) that didn't happen soon enough for the latest jobs report. Manufacturing alone constitutes 77.63 per cent of the index.

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Note that in 2013, 2016 and 2017 a core rate of 0.3% was reported for January - without inflation increasing on a sustainable basis.

As per Use-based classification, the growth rates in January 2018 over January 2017 are 5.8% in Primary goods, 14.6% in Capital goods, 4.9% in Intermediate goods and 6.8% in Infrastructure/ Construction Goods. The NFIB survey also showed almost a third of owners reported raising compensation to retain or attract workers last month, the largest share in more than 17 years. Consumer price inflation (CPI) was at 5.07% in January.

"This easing appears to have come largely on the back of a slowdown in the food price inflation on account of one-off seasonal factors", Richa Gupta, senior economist and senior director, Deloitte India said. That jump helped fuel inflation scares and contributed to a quick correction in the stock market that saw major indexes fall more than 10%.

February's Consumer Price Index data is due out Tuesday at 7:30 am CT.

Furthermore, while the S&P lags its all-time high by 3.3 percent, the small cap and domestic focused Russell 2000 trails its by only 1.4 percent.

The RBI expects growth to pick up in the next financial year.

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