Prospects Daily: US inflationary pressures remain subdued

Important developments today:

1. US inflationary pressures remain subdued

US inflationary pressures remain subdued. U.S. consumer price index rose by a moderate 0.2% in January confirming the Federal Reserve’s view that inflationary expectations are well anchored. Indeed, after having risen to 3.9% last year on the back of a surge in commodity prices (gasoline and food) and upward pressure on motor vehicle prices (due to disruptions from the disaster in Japan), headline inflation has declined for the past five consecutive months to 2.9% in January as the impetus from these influences waned. With substantial slack in U.S. labor and product markets, inflation is expected to remain subdued in the coming months.

Among Emerging Market

In Europe and Central Asia, Turkey’s consumer confidence improved slightly in January according to an index maintained by the central bank, which increased by 0.2 points to 92.2, reflecting strong labor market performance and relatively low interest rates which have boosted purchasing power.

In the Middle East and North Africa, Tunisia’s consumer price index (CPI) inflation accelerated to 5.1% year-on-year (y/y) in January from 4.2% in December, largely driven by a monthly increase in food prices. Tunisia’s central bank, however, maintained an accommodative monetary policy stance keeping its key policy rate unchanged at 3.5% to help support its economic recovery. 

In Sub-Saharan Africa, Ghana’s CPI inflation rose to 8.7% (y/y) in January from 8.58% in December, driven mostly by an increase in fuel prices, but food price inflation remained relatively contained at 4.5%.