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December 15, 2018

US consumer price index in February kept its pace growth


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US consumer priceThe US consumer price index in February has kept its pace growth, indicating that inflation is creeping toward the Fed’s target, and probably will not cause interest rates to grow faster than expected. The core US inflation, which is excluding volatile components such as food and energy, in February accelerated by 1.8% yoy, remaining unchanged from the previous month, fully meeting the expectations of market participants. On a monthly basis, the consumer price index rises by 0.2%, representing a slowdown from the 0.5% in the previous month.

Including energy and food prices, the annual inflation reached 2.2% against 2.1% in January.

The data show that inflation is gradually accelerating. This corresponds to central bankers’ expectations of a gradual move towards target inflation and raising interest rates three times this year.

The lack of a surprise in the US consumer price index growth helped to calm the market.

The car prices have curbed inflation, as the prices of new cars fell by 0.5% in February (the fastest pace since 2009) while second-hand cars and trucks reported a 0.3% drop.

The energy in the US appreciated by 0.1% in February, while food costs remained unchanged. The airline ticket prices rose by 0.6%, while medical services shrank by 0.1%.

The inflation-adjusted hourly rate of pay reported growth of 0.4% yoy against a 0.7% rise in January.

The Fed have repeatedly said they expect the slowdown in inflation to be transient, and this was one of the reasons why the central bank raised its benchmark interest rate three times last year.


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