Consumer prices rose by the most in four years in January, according to the Department of Labour.
The consumer price index (CPI) — comprised of a basket of items ranging from clothes to pills — rose 0.6% month-on-month (+0.3% expected). It was the biggest increase since February 2013, led by a jump in energy and gas prices.
Although crude oil was lower for the month of January, its stabilised above $US50 per barrel as producers took steps to cut their output.
Year-on-year, CPI increased by 2.5% (2.4% forecast.)
Excluding volatile food and energy costs, so-called core CPI rose 0.3% month-on-month (estimated at +0.2%), the highest going back to 2006, and climbed 2.3% year-on-year (2.1% expected.)
The year-on-year change in core CPI is considered the benchmark print of this report. It has run above the Federal Reserve’s 2% target of inflation for several months, although the central bank prefers to use the more comprehensive personal consumption expenditures index.
The Fed had maintained that the dip in oil prices and its drag on inflation was transitory.