Stronger USD keeps US August CPI negative

The US Labor Department released August CPI figures which were largely in line with expectations. Lower fuel prices offset higher food prices to produce a CPI figure of -0.1%, in line with the consensus figure. The year to date figure was 0.2%, the same as 0.2% comparable figure from June. Core inflation, which strips out the more volatile food and energy component, came in at 1.8% for the last 12 months, the same as July’s figure and in line with market expectations. ANZ said core inflation remained “relatively sticky”, pointing to a reduction in the US economy’s spare capacity offsetting the impact from the stronger USD and lower oil prices. This is the sixth month in a row year-on-year core inflation had seen a rise of 1.8%. US 10y bond rates finished the day marginally higher, up 1bps to 2.30%.