U.S. February CPI increased by 6% year-on-year, in line with market expectations | Anue Juheng – International Stocks

The US Department of Labor announced on Tuesday (14th) that CPI in February increased by 6% year-on-year and 0.4% month-on-month, basically in line with expectations. After deducting energy and inflation, the core CPI increased by 5.5% year-on-year and 0.5% month-on-month, roughly in line with market expectations.

CPI increased by 6.0% in February (chart taken from Zero Hedge)

Among them, the annual growth rate of the CPI has declined for eight consecutive months, reaching a new low since September 2021, and the core CPI has declined for the sixth consecutive month, reaching a new low since December 2021.

After the release of the data, U.S. stocks rose slightly in the short term.That fingerFutures rose 1% before paring gains. Two-year U.S. Treasury yields rose to highs, and traders continued to bet on the Federal Reserve raising interest rates by 25 basis points this month.

In February, the core CPI increased by 5.5% year-on-year (chart taken from Zero Hedge)

The housing index was the largest contributor to the monthly increase of all items, accounting for more than 70% of the increase, with food, entertainment, and household goods also contributing. The food index rose 0.4% for the month, and the household food index rose 0.3%.

The energy index fell 0.6% for the month as natural gas and fuel oil indexes both fell. Indexes for used cars and trucks and health care both fell for the month.

However, the new indicator valued by the Federal Reserve—the core service CPI following deducting housing—only dropped slightly to an annual increase of 6.14%, and the cooling effect is not obvious.

High inflation remains one of the biggest challenges for the Fed. Powell hinted in congressional testimony last week that the Fed would raise interest rates faster than expected due to stronger-than-expected economic indicators. He pointed to stronger-than-expected data on factory output, consumer spending and employment, pointing to lingering inflationary pressures.

However, last week’s debacle at Silicon Valley Bank may have just prevented the Fed from maintaining its tightening measures. The Fed’s rate hikes to combat inflation might shock markets, underscoring the impact of higher rates on bank balance sheets.

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