CPI Report: Annual Inflation Rate Comes In At 2.4% In January, Below Wall Street Expectations

• Core CPI, which excludes food and energy, rose 0.3% in January, up from the 0.2% rise in December.
• On an annual basis, core CPI stood at 2.5%, in line with expectations.
• Food costs rose 0.2% in January, according to the BLS report, with five of the six major grocery store food group indexes registering increases during the month.

U.S. consumer prices rose lower than expected in January, according to the Consumer Price Index (CPI) report released on Friday.

According to data from the Bureau of Labor Statistics (BLS), on a seasonally adjusted basis, CPI rose 0.2% in January, after rising 0.3% in December.

This puts the annual rate at 2.4% before the seasonal adjustment.

Core CPI, which excludes food and energy, rose 0.3% in January, up from the 0.2% increase in December. This was in line with a Dow Jones estimate, according to MarketWatch data.

On an annual basis, core CPI stood at 2.5%, in line with expectations. The headline and core inflation are still above the Federal Reserve’s long-term target of 2%.

Following the release of the CPI report, the benchmark 10-Year Treasury yield fell four basis points to 4.062%, while the 30-year yield declined three basis points to 4.699%. The 2-year Treasury yield declined five basis points to hover at 3.416% at the time of writing.

Food, Shelter Costs Rise, Energy Costs Decline

Food costs rose 0.2% in January, according to the BLS report, with five of the six major grocery store food group indexes registering increases during the month. The shelter index and the index for rent rose 0.2% in January, according to the BLS.

The report stated that the index for energy decreased 1.5% in January, while the gasoline index fell 3.2%.

Recreation Costs, Airfares Jump

Recreation costs rose 0.5% in January, while airfare costs soared 6.5% over the month.

The index for communication rose 0.5% during the month, and the index for apparel increased 0.3%. The new vehicles index rose 0.1% in January.

Following the release of the CPI report, the odds of a 25-basis-point rate cut in June edged up slightly to 49.7%, according to the CME FedWatch tool, up from 48.9% a day ago. However, the odds of a 25 bps cut in March remain low, at 9.8%.

Meanwhile, U.S. equities were mixed in Friday’s opening trade. At the time of writing, the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 index, was up by 0.04%, the Invesco QQQ Trust ETF (QQQ) fell 0.06%, while the SPDR Dow Jones Industrial Average ETF Trust (DIA) declined 0.09%. Retail sentiment around the S&P 500 ETF on Stocktwits was in the ‘bearish’ territory.

The iShares 7-10 Year Treasury Bond ETF (IEF) was up 0.3% at the time of writing.

Also See: Pinterest's Fundamentals Are ‘Clearly Deteriorating,’ Say Analysts: PINS Stock Tumbles 21% Pre-Market Following Q4 Revenue Miss

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