USA wholesale prices rose in January, led by gasoline

High WPI inflation works against further rate cuts

Analysts polled by Reuters had predicted the consumer price index (CPI) would rise 2.4 percent, the biggest gain in almost three years, versus a 2.1 percent gain in December.

In a separate report, meanwhile, the Labor Department said the Consumer Price Index jumped 0.6 percent last month - the largest increase since February 2013 - as households paid more for gasoline, new motor vehicles, airline fares and clothing.

Chinese inflationary pressures went up a cog in January, led by another enormous surge in producer price inflation (PPI).

Fuel & power group registered a rise in prices for the sixth straight month, on a y-o-y basis.

The index for primary articles (weight 20.12 per cent) declined by 0.2 per cent to 255.7 from 256.3 for the previous month.

The Australian dollar traded at $0.7722, up 0.1 percent on the day.

Although the drop largely reflected the fact that unseasonably warm weather had reduced demand for heating, causing utility output to fall, some analysts argued that it was worrying that overall industrial output was flat compared with January 2016. The Fed targets inflation at 2 percent a year, enough to keep prices relatively stable while encouraging economic activity.

January was also considerably stronger than the same month a year ago, with sales up 5.6 percent by that measure.

The ONS said the rise in inflation, which measures the change in price for a wide basket of goods and services, was mainly down to pricier fuel, which went up 3.4% between December and January.

True Potential deputy chief investment officer Chris Leyland warned the rising figure - not matched by rising interest rates from the BoE - would continue to hit savers hardest.

"However, given the extraordinary times due to the Brexit, the BoE Governor Mark Carney had clear stated that the bank is ready to tolerate a higher than otherwise inflation and would stay as accommodative as possible during the two-year Brexit negotiation period".

Most economists now expect the RBI to hold rates until at least the second half of next year. Energy prices rose 1.5 percent in December, the fourth consecutive month in which they have increased by more than a full percentage point. But it was below a forecast for 1.9% in a Reuters poll of economists, as falling clothes prices offset some of the upward pressure on inflation from fuel and food.