The latest Consumer Price Index (CPI) report showed inflation continuing to persist in January, with the headline CPI rising 0.3% month-over-month. The increase was driven by shelter, food, and core inflation, while energy prices declined. Overall inflation moderated on an annual basis to 3.1% but remained elevated. Markets had a mixed reaction to the hotter-than-expected inflation data.
CPI Up 0.3% Monthly in January 2024
The Consumer Price Index (CPI) increased 0.3% in January 2024, building on a 0.2% rise in December. Over the past year, prices climbed 3.1% before seasonal adjustments, slowing from December’s 3.4% growth.
The shelter index saw a substantial 0.6% increase in January, accounting for over two-thirds of the monthly rise. Both food at home and food away from home indexes also grew 0.4% and 0.5%. However, the energy index fell 0.9% as gasoline prices declined.
Core CPI, excluding food and energy, rose 0.4% with price hikes in shelter, insurance, and medical care. On an annual basis, core inflation remained steady at 3.9%, matching the prior period. While the food index has increased 2.6% over the past 12 months, the energy index decreased 4.6%.
Immediate Market Impact
The latest Consumer Price Index (CPI) data release showing a 0.3% monthly increase had mixed impacts across markets this morning. Stocks were changed little, with the Dow up slightly, the NASDAQ down modestly, and the S&P nearly flat. Meanwhile, gold and the dollar weakened, oil and bond yields rose, and significant currencies like the Euro declined versus the dollar.
In commodities, energy prices were mostly higher following the CPI report, with oil up while natural gas fell. Precious metals weakened with lower gold and silver prices. Wheat, soybeans, and corn gained.
The inflation data pushed Treasury yields higher across the curve, though shorter-dated yields rose more significantly. The US 10-year yield climbed over 10 basis points.
Overall, the higher-than-expected CPI print signaling persistent inflation led to a modest risk-off tone in markets. The dollar strengthened while stocks could not sustain much upside, and gold declined. Commodities were mixed with energy outperforming but precious metals dropping.
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