US consumer prices rose by 0.7 per cent in January, pushed higher by a 5 per cent increase in energy prices.

Over the year prices have risen by 4 per cent, surpassing increases in hourly earnings for workers. Real average hourly earnings have fallen by 0.7 per cent over the past year, the 7th consecutive monthly fall.

However, the core rate of inflation, which excludes food and energy, rose by a more modest 0.2 per cent, or 2.1 per cent year on year. This was down from an annual rate of 2.2 per cent.

“Overall price inflation remains under control,” said Ian Morris, US economist at HSBC in New York.

Shelter and medical expenses both rose by just 0.1 per cent. Among the fastest price rises was a 0.7 per cent increase in tuition costs.

Paul Ashworth, an analyst at Capital Economics, said that much of the focus in the market had shifted from the short-term trend in inflation to unemployment and resource utilisation. With unemployment at 4.7 per cent, some economists are concerned that wage settlements may start to accelerate, taking underlying inflation higher.

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