US CPI shows the run of strong data isn’t over yet

24th March 2015 By: Ranko Berich

US CPI – 24/03/2015

The dollar may have taken a big step back in recent trading sessions, but February’s CPI data suggests that the run of strong US data is not over yet. Headline CPI rose healthily in February, showing that the US is still resisting the tide of low inflation that is sweeping other developed economies.

Although recent downwards shocks mean that US inflation was flat like the UK on a year-on-year basis, the similarities between the two recoveries end there. Once food and fuel are excluded from the data, core CPI growth in the US was robust, increasing to a 1.7% annual growth rate.

Last week’s FOMC statement was characterised as dovish by many observers, but in reality the statement was balanced and simply kept the Fed’s hands free to respond to the changing economy. The two most noticeable trends at the moment are strong job creation and robust inflation and should this continue, the Fed may well reveal its inner hawk.

Recent volatility highlights just how nervous the markets are about the staggering heights the dollar has reached. Over the coming months, US fundamental data releases will be key to currency moves.