U.S. consumer prices increase in line with expectations, core weaker than expected

US consumer prices increased 0.4% month-over-month in February, in {{0|line}} with market expectations. On an annual basis, CPI rose 1.7%, the largest increase in prices since February last year.

Core CPI, which strips out volatile food and energy prices, increased 0.1% month-over-month, leading to a 1.3% annual increase, below the expected 1.4%.

Markets have been fearful of high inflation with the recent tech sell-off occurring as markets fear the Federal Reserve is falling behind the curve and may have to begin tapering their asset purchase programme sooner than is currently being communicated.

A sharp increase in inflation this month could have set the bulls rushing to the exits but, as it happens, inflation was broadly in line with expectations.

In immediate reaction, US stock futures jumped as fears of an immediate spike in inflation subside for now. The United States 10-Year yield dropped back to 1.55% and the US Dollar Index fell to session lows.