US inflation hits new 40-year high in Jan; stocks fall; bond yield rises

Inflation soared over the past year at its highest rate in four decades, hammering America’s consumers, wiping out pay raises and reinforcing the Federal Reserve's decision to begin raising borrowing rates across the economy.

The Labour Department said Thursday that consumer prices jumped 7.5 per cent last month compared with 12 months earlier, the steepest year-over-year increase since February 1982. US stocks fell on Thursday in intra-day trade, with Big Tech leading the declines. Rate-sensitive S&P 500 sectors were among the biggest percentage losers, including real estate and utilities.

Government bond yields rose sharply, with the benchmark 10-year Treasury note touching 2 per cent, its highest since August 2019.

The acceleration of prices ranged across the economy, from food and energy to apartment rents and electricity.

When measured from December to January, inflation was 0.6 per cent, the same as the previous month and more than economists had expected. 

Prices had risen 0.7 per cent from October to November and 0.9 per cent from September to October.

Shortages of supplies and workers, heavy doses of federal aid, ultra-low interest rates and robust consumer spending combined to send inflation leaping in the past year. 

Wages are rising at the fastest pace in at least 20 years. Ports and warehouses are overwhelmed, with hundreds of workers at the ports of Los Angeles and Long Beach, the nation's busiest, out sick last month.

Many products and parts remain in short supply as a result. Even when measured month to month, prices for a broad range of goods and services accelerated from December to January.

 

Russia inflation hits 6-year high, adds rate-hike pressure (Bloomberg)

Russian inflation accelerated to the highest level in six years in January, adding to pressure on the central bank to increase interest rates further this week. Consumer prices rose 8.73 per cent in January, the Federal Statistics Service said on Wednesday, driven by increases in fruits and vegetables, and construction materials and electronics.

EU raises inflation forecasts on supply snags, energy crisis (Agencies)

The European Commission on Thursday raised its inflation expectations for this year, but sees prices moving below the European Central Bank’s target of 2 per cent in 2023. The institution said inflation will hit 3.5 per cent this year from a November forecast of 2.2 per cent. Inflation in the euro zone broke records in December and January.