On softer food prices, CPI contracts to 3.17 per cent in January

The market stayed on the bull Wednesday afternoon but gains were moderate

The producer price inflation of China has increased more than what is estimated in the month of January to near 6-year high on account of a pick-up in steel prices and other raw material prices, adding to estimates that world manufacturing activity is gaining momentum.

Vegetable prices at the farm gate contracted by 32.32 per cent in January from a decline of 33.11 per cent in December.

"Based on the expected trajectory of food prices, commodity prices and exchange rates, we expect WPI inflation to rise further in February 2017, before easing marginally in March 2017", she added.

Inflation in the manufactured goods category accelerated marginally to 4% in January from 3.7% in December.

The ONS said that excluding volatile items such as food and fuel, core inflation held at 1.6% in January, lower than forecasts for it to pick up to 1.8%.

The annual rate of inflation based on monthly WPI, stood up at 5.25% for January 2017 over the same period a year ago and 3.39% for the previous month (December), official data said today.




Stephen Clarke, economic analyst at the Resolution Foundation, said: "Two years of rapid jobs growth and ultra-low inflation have given a major boost to living standards". A reading closer to the central bank's target was seen as adding more pressure on policy makers to lift interest rates from the record low of 0.25%, where they have stood since August 4.

A higher rate was seen in December 2012, when inflation was 2 percent.

The average United Kingdom house price was GBP 220,000 in December, which was GBP 15,000 higher than in the same month of the previous year and GBP 3,000 higher than last month.

Economist Victoria Clarke said the shortage of vegetables after extreme weather ravaged crops across Europe might have also pushed up prices at the supermarket checkout. In diesel and petrol, inflation went up by 31.10 per cent and 15.66 per cent, respectively, during the month.

The inflation rate for the "rubber and plastic products" group rose 0.1 per cent due to higher prices of expandable polystyrene, polyester film and HDPE bag and plastic/PVC shoes and HDPE woven fabric.

The DIPP also revised upward inflation estimate for November to 3.38% from the earlier provisional estimate of 3.15%.

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