US prices climb higher than forecast

| 17/02/2011

(Bloomberg): The cost of living in the U.S. climbed more than forecast in January, led by higher prices for food and fuel that may be starting to filter through to other goods and services. The consumer-price index increased 0.4 percent for a second month, exceeding the 0.3 percent median estimate of economists surveyed by Bloomberg News, figures from the Labor Department showed today in Washington. The so-called core rate, which excludes volatile food and fuel costs, rose 0.2 percent, the biggest gain since October 2009. Accelerating growth is prompting some companies to carry out beginning-of-year price increases even as consumers remain constrained by unemployment at 9 percent.

“You’re going to see more companies that attempt to pass through” higher costs, said Tom Porcelli, chief US economist at RBC Capital Markets Corp. in New York, who correctly forecast the gain in core prices. “How successful they are depends on the economic backdrop. We’re looking at a slightly firmer inflation backdrop.”

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