Consumer prices rose in January as unseasonably cold weather boosted demand for electricity and heating fuel, but inflation pressures remained muted.

The Labor Department said on Thursday its Consumer Price Index edged up 0.1 percent, with increases in the cost of household energy accounting for most of the increase.

The CPI had risen 0.2 percent in December and last month’s gain was in line with economists’ expectations.

In the 12 months to January, consumer prices advanced 1.6 percent after increasing 1.5 percent in December.

Stripping out the volatile energy and food components, the so-called core CPI also rose 0.1 percent for a second straight month. In the 12 months to January, core CPI rose 1.6 percent, slowing from a 1.7 percent increase in December and the smallest rise since June.

With consumer inflation continuing to run below the Federal Reserve’s 2 percent target, monetary policy is likely to remain accommodative for a while even as the U.S. central bank reduces the amount of money it is injecting into the economy each month.

 The number of Americans filing new claims for unemployment benefits fell last week, pointing to steadily improving labor market conditions, despite two straight months of weak hiring.

Initial claims for state unemployment benefits declined 3,000 to a seasonally adjusted 336,000, the Labor Department said on Thursday. Claims for the prior week were unrevised.

Economists polled by Reuters had forecast first-time applications for jobless benefits falling to 335,000 in the week ended February 15.

Janet Yellen is discovering that when it comes to providing monetary stimulus, the Federal Reserve is damned by emerging markets when it does and damned when it doesn’t.

Sixteen months after she used a Tokyo gathering of global policy makers to defend her institution against criticism it was purchasing too many assets, Fed Chair Yellen attends this week’s Group of 20 meeting in Sydney being lobbied to pay greater attention to foreign fallout as the U.S. slows its bond-buying.

What’s not changed is her response: A well-managed U.S. economy benefits the world and other central banks have tools to support their own economies. That’s disappointing counterparts such as India’s Raghuram Rajan and Gill Marcus ofSouth Africa, who criticized the lack of a synchronized global monetary policy as developing-nation currencies suffer their worst start to a year since 2010.

The Fed’s “job is not to make policy for India, it’s to make policy for the U.S.,” said Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics in Washington and a former Fed economist. “Blaming other people for their problems isn’t very helpful.”

Almost three weeks since taking the helm of the Fed, Yellen, 67, makes her international debut as its chief when she joins fellow G-20 finance ministers and central bankers at the Feb. 22-23 talks. They meet in the wake of a decline in emerging-market shares and currencies on concern over softer economic growth. – full article HERE