The U.S. consumer price index increased in December as fuel and clothing prices rose significantly. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated consumer prices rose by 0.5% in January, instead of the 0.3% increase expected and higher than December’s comparable figure of 0.2%. On a 12-month basis, the consumer inflation rate remained unchanged at 2.1%.
Financial markets had an unusual reaction. U.S. bond yields were sent higher but at the same time, USD was off by around 0.8% against other major currencies. 2 year bond yields increased by 5bps to 2.16% and 10 year yields increased by 7bps to 2.90%. Prices of overnight cash futures increased after the data was released and the chance of a March rate rise moved to 79%.
Core prices remained unchanged from December’s comparable figures. CPI excluding food and energy rose by 0.3% over the month and 1.8% for the year.