U.S. February Consumer Prices were higher than forecast in all categories and higher than January CPI except for Y/Y Core (ex. food & energy) which dropped to 3.8% from 3.9%. Even excluding volatile gasoline prices, M/M CPI was +0.4% vs. the +0.3% estimate. Not a great result for Fed Chairman Powell and his team at the FOMC who have been patiently waiting for the current 5.50% target overnight rate to work its magic to bring inflation closer to the Fed’s 2% long term goal.
Real Average Hourly Earnings showed increasing wages (thankfully to most), helping to offset higher inflation. Annual hourly earnings were +1.1% and M/M weekly earnings were +0.5%.
Annual CPI was reported at a 3.2% annual rate (3.1% est.). And this excludes effects of ‘shrinkflation’ (shrinking the quantity or size of a service or product while leaving prices unchanged), so inflation is higher than is being reported.
The dollar is higher vs. all major pairs in trading today. Key dollar gains: +0.60% vs. JPY, +0.40% vs, GBP, +0.36% vs. NZD, +0.20% vs. AUD, +0.16% vs. MXN, +0.13% vs. CAD and +0.10% vs. EUR. The dollar index is +0.16% at 103.035.
U.S. Treasury yields are higher following the CPI data with uniform gains across the 1yr-30yr tenors. The 10-year yield is +0.047% trading at 4.145% (closed yesterday 4.099%).
Next key data on the economic calendar is Thursday’s M/M Retail Sales (estimated +0.8% vs. the previous -0.8%, really?), along with February PPI (inflation at the producer level).
