US consumer prices increased more than expected last month amid rises in the costs of gasoline and shelter, casting further doubt on whether the Federal Reserve will start cutting interest rates in June.
The consumer price index (CPI) rose 0.4 percent last month after advancing by the same margin in February, the US Department of Labor’s Bureau of Labor Statistics (BLS) said yesterday.
Gasoline and shelter costs, which include rents, accounted for more than half of the increase in the CPI.
Photo: EPA-EFE
In the 12 months through last month, the CPI increased 3.5 percent also as last year’s low reading dropped out of the calculation. That followed a 3.2 percent rise in February.
The US central bank has a 2 percent inflation target. The measures it tracks for monetary policy are running considerably below the CPI rate.
Economists polled by Reuters had forecast the CPI gaining 0.3 percent on the month and advancing 3.4 percent on a year-on-year basis.
Though the annual increase in consumer prices has declined from a peak of 9.1 percent in June 2022, the disinflationary trend has slowed in recent months.
Following last week’s stronger-than-expected job growth last month as well as a drop in the unemployment rate to 3.8 percent from 3.9 percent in February, some economists have pushed back rate cut expectations to July. Others still believe the Fed will move in June. A minority see the window for rate cuts closing.
Fed Chair Jerome Powell has repeatedly said that the US central bank is in no rush to start lowering borrowing costs.
Financial markets saw a roughly 56 percent probability of the Fed cutting rates at its June 11-12 policy meeting, according to CME’s FedWatch Tool. The Fed has kept its policy rate in the 5.25-5.50 percent range since July last year. It has raised the benchmark overnight interest rate by 525 basis points since March, 2022.
Excluding the volatile food and energy components, the core CPI gained 0.4 percent last month after a similar rise in February and January. In the 12 months through last month, the core CPI rose 3.8 percent, matching February’s increase.
“Data was hotter than expected, both on the top line and the core number, and that’s driven futures down because it’s indicative of sticky inflation and the potential for the Fed to either cut fewer times or not at all in 2024,” Dakota Wealth Management LLC senior portfolio manager Robert Pavlik said.
“I don’t think it speaks to the need for a rate hike, but stocks have to be re-priced for a different environment which is presenting itself with this inflationary data.”
Yields across US government bonds spiked after the consumer price data was released, with the yield on the 10-year note last at 4.4927 percent.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
GREAT SUCCESS: Republican Senator Todd Young expressed surprise at Trump’s comments and said he expects the administration to keep the program running US lawmakers who helped secure billions of dollars in subsidies for domestic semiconductor manufacturing rejected US President Donald Trump’s call to revoke the 2022 CHIPS and Science Act, signaling that any repeal effort in the US Congress would fall short. US Senate Minority Leader Chuck Schumer, who negotiated the law, on Wednesday said that Trump’s demand would fail, while a top Republican proponent, US Senator Todd Young, expressed surprise at the president’s comments and said he expects the administration to keep the program running. The CHIPS Act is “essential for America leading the world in tech, leading the world in AI [artificial
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would
RSS