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US Monthly Inflation Doubles in the Second Quarter, Dollar Gains

Posted by Joseph Trevisani on Jul 22, 2014 2:36:00 PM

The U.S. latest inflation figures show the average monthly increase roughly doubling in the second quarter from the first and almost tripling that of the fourth quarter of last year, bringing the yearly rate into line with the Federal Reserve’s 2.0 percent target. 

The consumer price index climbed 0.26 percent in June, as expected, bringing the three month moving average to 0.29 percent. In March, the last month of the first quarter the average was 0.15 percent and in December the final month of the fourth quarter the average was 0.11 percent.  In May the index rose 0.4 percent. 

Core inflation, that is without energy and food price changes, gained 0.13 percent in June, slightly more than half the 0.2 percent forecast and exactly splitting May’s 0.26 percent rate, according to the Labor Department today.  The three month moving average of 0.21 percent in  June was about half again as high  as the  rates in  March, 0.15 percent and  December, 0.13 percent. 

The yearly increase in June of 2.1 percent was unchanged from May and is the highest   since 2.2 percent in October 2012. Annual core inflation was 1.9 percent, 0.1 percent lower than in May and except for last month, the highest it has been in 16 months. 

The Labor Department said that a sharp rise in the price of gasoline accounted for two-thirds of the CPI increase in June. 

The dollar reversed losses against the euro on the release and ended at 1.3466 its strongest close against the united currency since November 20th last year.

U.S. stock indexes finished higher though off their best levels. Treasuries were slightly higher with the generic two-year yields losing 2 basis point to 0.47 percent and the 10-year dropping 1 point to 2.46 percent. 

 

Joseph Trevisani

Chief Market Strategist

WorldWideMarkets Online Trading

Charts: Bloomberg

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