Consumer prices rose the most in four months in January as the price of gasoline jumped, highlighting a growing concern that higher energy costs could slow the economic recovery.
BRIAN KIM, CURRENCY STRATEGIST, ROYAL BANK OF SCOTLAND, STAMFORD, CONNECTICUT
The headline CPI was a little weaker than expected. The year-on-year figure was weaker as well, but not by much. So weaker inflation is not really worrying, but doesn't prevent another round of quantitative easing to stimulate the economy and should keep rates low for some time.
SEAN INCREMONA, ECONOMIST, 4CAST LTD, NEW YORK
The underlying measure before rounding was slightly higher than what we see usually, but there is really nothing worrying about inflationary pressures at this point. The inflation data is going to be a focus of Fed policy with some recent stronger data and some of the survey measures have come up a bit recently like the prices paid in the Philly Fed yesterday. If we start to see those filter through they could be an impediment to keeping policy so easy, but we don't see those materializing at this point.
JACOB OUBINA, SENIOR U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK
The headline, compositionally it was very similar to yesterday's PPI report in that we had autos weighing on the headline. In terms of core prices they were broadly in line with expectations.
The Fed's going to continue to focus on PCE instead of CPI. Even if you had PCE run above 2 percent on a short-term basis they're still going to be comfortable with that as long as the unemployment rate remains high.
TODD SCHOENBERGER, MANAGING DIRECTOR AT LANDCOLT TRADING IN WILMINGTON, DELAWARE
Right with consensus. It is clear that inflation is in check, there's no dramatic concern. What this does is alleviate any argument inviting a QE3, but all eyes are on Greece so this shouldn't have an impact on trading.
VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS
Consumer prices picked up in January, as both headline and core CPI rose by 0.2% after prices barely changed in the last quarter of 2011, posting growth of just 0.1% only in November. Back then, energy prices (especially gasoline) were falling which dragged the index down. After having fallen for three straight months, energy prices posted the rise the market was expecting (gasoline prices at the pump had suddenly picked up during the month) and the continued price gains in core items (apparel and medical) made overall price movement accelerate from the prior year end's lull. While headline's growth of 0.2% is above trend, this is the fifth month out of seven that core prices rose by 0.2% -- the other two months growing by 0.1%. Market analysts accurately predicted the combination of rising gasoline prices with core resilience as estimates averaged to 0.2% growth.
(Americas Economics and Markets Desk)