Core consumer prices, excluding food and energy, rose 0.2% in February, but the annual inflation rate held steady at 1.8%, undershooting expectations, the Labor Department reported on Tuesday.
X The soft inflation reading could slightly lower odds of a fourth Fed interest-rate hike in 2018. After the report, Dow Jones industrial average, S&P 500 and Nasdaq 100 futures extended gains, with the major averages opening modestly higher on the stock market today. The 10-year Treasury yield pointed lower.
The overall consumer price index rose 0.2% on the month and 2.2% from a year ago, matching expectations.
The Fed is expected to hike rates three times this year, with quarter-point moves, as the economy looks headed for relatively strong growth and the jobless rate could sink to a multidecade low. Fed policymakers expect that wage pressures will rise as unemployment falls, leading companies to pass on some of their higher wage bills in the form of price increases.
So far, official measures haven't detected a pickup in wages. The Labor Department reported weaker-than-expected 2.6% annual average hourly wage inflation in February. But faster wage growth should begin to show up this spring, reflecting recently announced wage hikes from
CVS Health (CVS) and
Starbucks (SBUX) that didn't happen soon enough for the latest jobs report.
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Source : https://www.investors.com/news/economy/inflation-comes-in-a-bit-soft-in-february-sp-500-dow-jones-futures-rise/338