Instant view: Feb US CPI jump comes as no surprise

3 mins read

NEW YORK – U.S. consumer prices surged in February, culminating in the largest annual increase in 40 years, and inflation is poised to accelerate further in the months ahead as Russia’s war against Ukraine drives up the costs of crude oil and other commodities.

The consumer price index increased 0.8% last month after gaining 0.6% in January, the Labor Department said on Thursday.

In the 12 months through February, the CPI shot up 7.9%, the biggest year-on-year increase since January 1982. That was the fifth straight month of annual CPI readings north of 6%. Both figures were in line with what economists polled by Reuters had forecast.

MARKET REACTION:

STOCKS: S&P e-mini futures pared losses and were down 0.95%, pointing to a weak open on Wall Street

BONDS: Yields on benchmark 10-year notes ticked higher to 1.9741%. Two-year Treasury yields fell to 1.6963%

FOREX: The dollar index turned 0.03% higher

COMMENTS:

BRIAN JACOBSEN, SENIOR INVESTMENT STRATEGIST, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN


“This inflation report might be just a prelude to an even uglier report when we get the March data. Gasoline prices are up 20% since the beginning of the month. Food costs are up. Goods excluding food and energy downshifted to a slower gear in February, but food and energy will keep inflation looking really hot for at least another month. The Fed can’t bring peace to Ukraine and Russia, so there’s little that monetary policy can do to tame food and energy inflation. It may have to just say that it is serious about fighting inflation, but it is also seriously hamstrung in what it can do right now.”

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PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK

“Bottom line is inflation is elevated and there’s more to come.”

“I was looking for inflation to peak in the second quarter but now that depends on oil. Perhaps we won’t see any relief until the end of the year.”

“Powell already told us we should expect a 25 basis point rate hike (this month). It should be 50 basis points or even 75 basis points but that won’t happen because of what’s happening in Ukraine right now.”

(Compliled by the global Finance & Markets Breaking News team)