US inflation rose more quickly than expected in the month of January, fueling fears that the interest rate is set to accelerate this year.
The Consumer Price Index measure of inflation grew 0.5 per cent against economists ‘ forecasts of a 0.3% increase.
At the beginning of this month, a report showed acceleration in US wage growth. That has raised fears that the Federal Reserve will raise interest rates earlier than previously thought.
The report on wages triggered days of volatility in the financial markets.
The US Bureau of Labor Statistics said there had been inflation across a range of sectors, including gasoline, clothes, medical care and food.
Over the 12 months to January, inflation remained at 2.1%.
Mitul Patel, head of interest rates at Janus, Henderson Investors, said the figure was a surprise, as economists expected to ease to 1.9%.
Luke Bartholomew, an investment strategist at Aberdeen Standard Investment said: “There is a risk that this will pour gasoline on the fire of the last week of the market to sell.
“That boiled down to the real sensitivity to the prospect of an increase of inflation that the markets had anticipated. That nervousness is not going away.”