On Thursday, the Labor Department said that the Consumer Price Index increased 0.2% in April, following the drop of 0.1% in March. The result was lower than the expectations of a 0.3% rally.
In addition, for the year ended April, the Consumer Price Index rose 2.5%, which is its largest increase in over one year. According to the Labor Department, excluding volatile food and energy components, the Consumer Price Index rose 0.1%, which was higher than the estimates of increasing 0.2%.
“The sources of the weakness in last month’s reading do not suggest the onset of a trend shift lower,” Michael Feroli, an economist at JPMorgan, said on Thursday. “Today’s number would not deter the Fed from hiking (interest rates) again next month.”
After the announcement of the CPI data, the yield on the benchmark 10-year Treasury note was lower at 2.966% on Thursday morning, and the yield on the 30-year Treasury bond was lower at 3.134%.
Additionally, economists expect that the core PCE price index, which is the personal consumption expenditures price index excluding food and energy, a preferred inflation measure of Fed, to breach the target of 2% in May. In February, the index had risen 1.6%, and in March, it increased 1.9%.