Unlike the release of US CPI figures for February, the latest CPI figures were not clouded by being released right next to a Fed FOMC meeting and so a bit more attention should be paid to them this month. The headline inflation rate came in at 0.1%, a rise from February’s -0.2%, but less than the 0.2% rise expected. Petrol prices were responsible for much of the index’s rise but they were largely offset by falls in the price of clothing. The year-to-date CPI figure fell to +0.9%, which is down from February’s comparable figure of 1.0%.
Westpac pointed to Janet Yellen’s recent comments regarding the first quarter jump in inflation as being “transitory” and how the latest CPI figures added weight to her argument. ANZ took the opposite view and said the numbers “did little to support” her view. Got to love economists!
February figures contained surprisingly strong core inflation numbers but comparable figures for March indicated the first drop in core CPI after a run of nine months of increases. Core inflation, which strips out the more volatile food and energy components, rose 0.1% for the month and 2.0% over the last 12 months, down from February’s figure of 2.3%.
The CPI figures, plus lower than expected jobless claims, sent treasury yields higher. 2 year bonds went from 0.75% to 0.77% and 10 year bonds rose from 1.76% to 1.80%.