US dollar index down to 92 as Consumer Price Index rises by 6%
Consumer prices jumped up in March on a robust economic recovery from a year ago when the coronavirus pandemic took a stranglehold of the US economy, the Labor Department said on Tuesday.
The consumer price index increased by 0.6% compared to the month before, while it was up by 2.6% from the same month a year prior. The year-on-year gain is the highest since August 2018 and was significantly higher than the 1.7% recorded in February.
According to estimates by Dow Jones, the index was anticipated to rise by 0.5% on a monthly basis and 2.5% from March 2020.
The report “is the clearest indication so far that the signs of mounting inflation evident in business surveys and producer prices are feeding through to stronger consumer prices,” wrote Michael Pearce, senior U.S. economist at Capital Economics. “For all the focus on supply disruptions pushing goods prices higher, the strongest upward pressure on prices is coming from the services sector.”
Gas prices were the biggest contributor to the monthly gain, surging 9.1% in March and responsible for about half the overall CPI increase. Gas is up 22.5% from a year ago, part of a 13.2% increase in energy prices.
“As inflation was only slightly hotter than expected, the dollar, which was rising ahead of the data, eased back down to levels it was trading prior to the publication of data,” says Fawad Razaqzada, Market Analyst at ThinkMarkets.