US consumer prices jump 0.5pc in January

WASHINGTON: US consumer inflation jumped sharply in the first month of 2018, the government reported Wednesday -- an increase that was sure to spark jitters on Wall Street about interest rate hikes coming sooner than expected this year.

The consumer price index (CPI), which tracks the costs of household goods and services, rose 0.5 percent last month, exceeding analyst expectations, according to the Labor Department's closely-watched report.

The core index, which excludes volatile food and fuel categories, rose 0.3 percent, the largest increase since January 2017.

The long anticipated upward movement in consumer prices was sure to fuel worries among investors that the Federal Reserve could tighten interest rates at a quicker pace.

The annual CPI increase held steady at 2.1 percent, with the core rate up 1.8 percent, also the same as in December, the report said.

Meanwhile, falling auto sales in January helped drive down the pace of consumer spending, which fell by the largest amount in 11 months as outlays for hurricane reconstruction subsided.

Wall Street jitters sparked a global stocks sell-off this month in large part due to fears that the potential for mounting inflation amid strong job growth could push the Fed to raise rates more aggressively than the three hikes predicted this year.

In a separate report Wednesday, the Commerce Department said retail sales in January fell 0.3 percent, seasonally adjusted, after holding flat in December.

The result is subject to revision but fell far short of analyst expectations and could suggest consumer demand is reverting to a slower trend at the start of the year.

American consumers spent an estimated $492 billion last month, which was still a solid 3.6 percent higher than January 2017.

Vehicle and parts sales fell 1.3 percent from December, the largest drop since August, even as gas stations saw a healthy bump, rising 1.6 percent in the month.

Within the numbers, there were also were signs that spending on reconstruction after the late summer hurricanes continued to decline.

Sales of building materials and garden supplies saw their largest monthly decrease in nearly two years, giving up 2.4 percent.

And home furnishings fell 0.4 percent, after a 1.1 percent drop in December.

Online retail had a flat January, while sales at long-suffering department stores rose 0.8 percent.