In June last year, US inflation hit its highest level in 40 years. Since then, the rate of inflation has fallen steadily - but not as quickly as economists had predicted.
Despite the extremely strong labor market of late, inflationary pressures in the US eased further in January, albeit not as much as expected. As the US Department of Labor announced, consumer prices rose by 0.5 percent compared to the previous month and were 6.4 (previous month: 6.5) percent above the level of the same month last year. Economists had expected monthly price increases of 0.4 percent and annual inflation of 6.2 percent.
Annual inflation has fallen for the seventh straight month since it hit a four-decade high of 9.1 percent in June last year. The US Federal Reserve has aggressively raised interest rates in an attempt to cool the economy. The central bank is targeting an inflation rate of around 2 percent.
Core consumer prices (excluding energy and food) rose 0.4 percent on the month and 5.6 (previous month: 5.7) percent on the year. The economists surveyed had expected rates of 0.3 and 5.5 percent. Many economists consider the core rate to be a better indicator of future inflation.
A slightly firmer open is on the horizon for US stock markets. The dollar initially picked up after the inflation data, but is currently bouncing back. The dollar index fell 0.3 percent. Yields in the bond market are recovering somewhat from their lows for the day, but are still below the levels of the previous day.