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Wednesday, 21 February, 2001, 14:38 GMT
US inflation jumps
US flags on Wall Street
Inflation and a slowdown stalk the US economy
Inflation in the US rose at twice the rate expected in January.

The US consumer price index (CPI) rose 0.6%, a rise reflecting the steep rise of 3.9% in energy prices

But the core price - which excludes the volatile energy and food markets - was also higher than expected at 0.3%.

These price pressures put inflationary concerns back in the foreground of the US' economic worries.

Falling stocks

This in turn means that the Federal Reserve is less likely to cut interest rates at the forthcoming meeting in March.

"I suspect that this is going to temper any talk of the Fed cutting interst rates by half a point at the next meeting," said Peter Cardillo, director of research at a New York brokerage.

And with reduced hopes of a further interest rate cut, investor confidence in stocks is decreasing.

The key US share indexes - the Dow Jones Industrial Average, the Nasdaq and the Standard and Poor's 500 futures contract - all began to fall after the news.

The 0.6% rise in the overall Consumer Price Index followed a surprise 1.1% surge in wholesale prices last month, the biggest jump in more than a decade.

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See also:

13 Feb 01 | Business
Greenspan warns on US economy
05 Jan 01 | Business
Stocks slide on fresh US fears
31 Jan 01 | Business
US interest rates cut to 5.5%
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