U.S consumer prices rose moderately last month, at a slightly slower pace than in January.
The consumer-price index rose +0.2% in February after rising a seasonally adjusted +0.5% in January.
Ex-food and energy, the core prices rose +0.2%, compared to +0.3% in January.
Market expectations were looking for a headline print of +0.2%, and a +0.2% core print.
In the year to February, overall prices rose +2.2%, the largest annual increase since November, while core prices were up +1.8% on the year. The market was expecting a +2.3% increase in overall inflation and core prices to rise +1.9%.
Wages
Real average hourly earnings were flat last month and real average weekly earnings rose a seasonally adjusted +0.3% on the month.
Digging deeper, today’s report showed an index of energy prices rose +0.1% on the month, as gas and fuel oil costs both fell. The price index for new auto’s declined for the second consecutive month, falling -0.5%. Cloth prices rose +1.5% on the month and transportation services increased +1%.
Despite the slightly tamer inflations numbers, fed fund futures are pricing in a +88.8% chance of a +25 bps hike at next weeks FOMC meeting (March 20-21).
Note: Fed policy makers have penciled in three rate increases this year, and have been monitoring the inflation picture closely.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Dean Popplewell
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