The Bureau of Labor Statistics has released the consumer-price index for January. The index, commonly referred to as CPI, calculates the average price of consumer goods such as foods and equipment. The CPI represents overall inflation – or deflation – in prices. This is the first CPI since the stock market correction, and the first 10-year treasury notes hit a 4 year high. Investors look closely at this data, and a worse than expected CPI could send markets downwards.
Analysts expected a 1.9 percent increase in total, with a 1.7 percent core increase. The Bureau of Labor Statistics announced a 2.1 percent total increase and a 1.8 percent core increase, meaning that prices increased at a higher rate than expected. Investors think this make the Fed increase interest rates at least 3 times in 2018. This caused a negative open in the Dow Jones, which quickly recovered. 10-year treasury notes gained 3.5 basis points, rising to 2.88 percent.
Michael Pearce, a prominent economist, said, “The increase in core CPI inflation in January is a sign of things to come over the rest of the year.”
Important numbers in the CPI include:
- Fuel oil gained 9.5%
- Gasoline gained 5.7%
- Food prices rose 0.2%
- Clothing costs increased by 1.7%
Read the full report here.