Benchmark U.S. Treasury yields US10YT=RR rose to a two-and-a-half week high of 2.524 percent after the data and were last down 9/32 in price to yield 2.5004 percent.

The Office for National Statistics (ONS) figure - which is a rise from the 1.6 per cent in December and the highest since June 2014's 1.9 per cent - was largely down to transport and fuel costs.

USA retail sales and inflation rose in January, strengthening the case for the central bank to raise interest rates.

The rise compared with a 3.89 percent annual gain forecast by economists in a Reuters poll and was faster than a provisional 3.39 percent jump in December.

SCOTTISH Chambers of Commerce has highlighted the "danger" for businesses that they will be forced to pass on higher costs to customers at a hard time, after official figures showed a further rise in United Kingdom consumer price inflation.

That has sparked talk of tighter monetary policy, though consumer inflation in China is believed to be still well within the central bank's comfort zone.

As per data, WPI inflation in vegetables, at (-) 32.32 percent in January, saw deflationary pressure for the fifth consecutive month.

This increase led to higher fuel prices on the local market and was coupled with the depreciation of the pound after Brexit, which, the Bank of England said in its latest report, is now being passed on to consumers.

While the rate of price rise in sugar was 22.83 percent, for fibres it was 15.18 percent, and 25.44 percent for minerals. The latest rise was below analysts' expectations of a 1.9% rise, but is up from 1.6% in December and was just 0.3% this time previous year.

In separate figures also released Wednesday, the Commerce Department said a steep drop in auto sales weighed on the USA retail sector in January, putting downward pressure on overall sales for the month.

However, the rising costs in food and fuel were partially offset by prices for clothing and footwear, which fell by more than they did a year ago. It was the largest monthly increase in over a year.

"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". The shelter index rose 0.2 percent, a smaller increase than in recent months. Much below this and the spectre of deflation and recession looms ominously, much above 2% and there is a risk of economic overheating and a unsafe inflationary spiral taking hold.

Meanwhile, Yellen's positive remarks regarding the growth of the US Economy boosted optimism on the upcoming USA retail sales and inflation data to be published on Wednesday along with the inflation rate and automobile sales which rose by 0.4% last month. This pushed up import costs, which in turn boosted consumer prices and caused inflation to increase.

MSCI's benchmark global equity index rose 0.7 percent to 444.22 points .MIWD00000PUS , after touching a record high of 444.29.