Blitz Bureau
WASHINGTON: The inflation headache in the US is not going away soon, as a recent report showed that wholesale prices rose in the month of January by 0.4 per cent, more than expected.
According to a report published in the usnews.com, the producer price index for the year increased by 3.5 per cent, unchanged from December but up from November’s 2.9 per cent reading. The core index, leaving out energy and food costs, rose by 0.3 per cent for the month and 3.4 per cent annually.
Producer costs are those paid by businesses and are often passed on to customers. The PPI report followed consumer price index for January that saw inflation rise by 0.5 per cent and 3 per cent for the year.
Interest rates Neither report, said the news portal, will please the Federal Reserve as it tries to bring inflation down to its 2 per cent annual goal. Fed Chairman Jerome Powell, it said, told members of the Senate Banking Committee that there is no reason to lower interest rates anytime soon following the central bank’s decision last month to pause monetary policy.
Economists now see maybe only one or possibly fewer interest rate cuts this year, meaning consumers will continue to grapple with high borrowing costs. Consumers are seeing no relief from high prices as shelter, transportation and food costs drove inflation in January.
That could present a political problem for President Donald Trump, who promised to reduce prices on his first day in the White House, said the usnews.com report. Trump is also pushing an ambitious economic agenda of import tariffs and tax cuts that could further stoke inflation.
Tariff troubles “The resurgence of inflation comes at a unique time, as the economy braces for tariffs, which if sustained, could add yet another inflationary pressure,” Paul Stanley, chief investment officer at Granite Bay Wealth Management, was quoted as saying the web portal report.
In particular, costs are rising the fastest for many key essentials such as groceries and insurance. Markets were little changed after the report and the yield on the 10-year Treasury, used as a benchmark for many consumer loans, fell slightly but remains above 4.5 per cent.
