US Inflation Jumped 0.5% In January, Higher Than Expected

India's factory output grows 7.1% in December

Food price inflation also appeared to be slowing - having risen strongly since mid-2016 - edging down 0.1 per cent on the month amid larger falls in the cost of meat, oils, milk, cheese and eggs. Last week the Bank of England kept the rate at 0.5 percent. Fruits and vegetables increased 0.5 percent, with fruit up 1.9 percent and vegetables down 1.2 percent.

"This is the second consecutive month in which IIP has shown high single-digit growth, which is encouraging", India Ratings and Research (Ind-Ra) Principal Economist Sunil Kumar Sinha said in a statement. The data followed wage figures earlier this month sent Treasury yields spiking and started a rout in equities that pushed them into the first correction in two years.

Lucy O'Carroll, chief economist at Aberdeen Standard Investments, said inflation was broadly in line with expectations and it may have now peaked, as the impact of sterling's post-referendum decline has fallen away.

The news comes less than one week after the Bank of England warned that it could lift interest rates more quickly than expected to help bring down inflation.

The 1.7 percent monthly gain in apparel prices, which account for about 3 percent of the CPI, was the biggest since 1990. The IIP data for November, which was released in January, had registered the industrial production growth to 25-month high of 8.4 per cent.

On a month-on-month basis, the core sub-index increased by 0.68 per cent in January 2018 was higher from 0.51 per cent recorded in December.

Government data released on Monday also showed that retail inflation softened marginally at 5.07 per cent in January. The cumulative growth in these three sectors during April-December 2017 over the corresponding period of 2016 was 2.8, 3.8 and 5.1 percent respectively.

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The inflation for housing increased to 8.33%, while that for miscellaneous items was flat at 3.78% in January 2018.

Policy makers look at the core index to better gauge underlying inflation because food and energy prices tend to be volatile.

The Labor Department report triggered the most severe stock market volatility in years, with some investors reassessing whether equity valuations could handle a steeper rise in interest rates that a pickup in inflation could push the Fed to deliver.

"This time around we are working on the assumption that the transport services category, air fares particularly, will apply some upward pressure to the 12-month inflation rate, with the month-to-month drop in prices likely to be less than in January previous year", she said. Even so, equities have recovered some ground, advancing for three trading sessions in a row through Tuesday.

"I do not expect a rate hike for the next five to six months", said Raghvendra Nath, managing director of Ladderup Wealth Management.

We've seen head-fakes before on USA inflation, but most of the recent periods of increases have been energy related, such as in the months late last summer after hurricanes struck Texas and Florida.

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