December Consumer Price Inflation Rate 0.4%... Annual Inflation Rate 1.4%
Core Consumer Price Inflation Excluding Fuel and Food Rises Only 0.1%
Government Bond Yields Turn Down
[Asia Economy New York=Correspondent Baek Jong-min] Although US consumer prices rose for two consecutive months, the increase was less pronounced than expected. As a result, US Treasury yields are showing a downward trend.
On the 13th (local time), the US Department of Labor announced that the Consumer Price Index (CPI) for December last year rose 0.4% compared to the previous month. The US CPI showed an increase for two consecutive months, rising 0.2% in November as well. This matched the forecast compiled by Dow Jones.
Core consumer prices, excluding energy and food, rose by only 0.1% in December. This was a smaller increase compared to 0.2% in November. Core consumer prices are the key indicator for US interest rate hikes.
CNBC reported that the 8.3% surge in gasoline prices had a significant impact on inflation, explaining the slowdown in core consumer price growth.
The annual consumer price inflation rate was 1.4%. This was 0.1 percentage points higher than the market expectation of 1.3%. It is the lowest level since 2015. The consumer price inflation rate in 2019 was 1.9%.
Core consumer prices rose 1.6% year-on-year. In 2019, core consumer prices increased by 2.3%.
CNBC stated that the overall market consensus is that inflation will be more pronounced this year. In particular, inflation is expected to be high in the coming months due to the base effects of the COVID-19 pandemic.
The Wall Street Journal also reported that in a survey last month, market experts forecasted that consumer prices would rise 2.4% year-on-year by June.
The inflation rate is linked to US benchmark interest rate hikes. The Federal Reserve (Fed) has introduced an average inflation targeting policy, stating that it will not raise benchmark interest rates unless inflation exceeds 2% on average, even if it temporarily goes above 2%.
Meanwhile, after the release of the consumer price index on the day, the yield on the US 10-year Treasury note weakened, falling to 1.109%. The Treasury yield had risen intraday to 1.19% the previous day due to the Democratic Party securing the Senate majority, which signals fiscal expansion policies.
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