Week of 16 March Summary: Markets React to FOMC, AI Selloff, Gold Surge
Thursday 20 March 2025
12 Feb. 2025 US CPI Release Results
Inflation is a critical economic indicator, and one of the primary ways to track it is through consumer price index (CPI) reports.
Traders, analysts, and central banks often pay close attention to these reports, which provide valuable insights into price changes across a basket of goods and services.
As such, the latest CPI report for the United States, which was released on Wednesday, 12 February, offers crucial data for understanding the current inflationary trends.
Let’s take a closer look at the numbers and implications of this report:
Key Takeaways:
The latest US CPI report, released on 12 February 2025, shows a 3% YoY increase in January inflation, with a 2.9% jump from December.
Key categories with significant price hikes include food, healthcare, and automobiles.
Following the report, major US stock indices fell, with the S&P 500 and Dow Jones losing 0.27% and 0.50%, respectively.
A Deeper Dive into the Latest US CPI
The latest US CPI report was released on Wednesday, 12 February, and revealed stubbornly high inflation rates in the world’s largest economy.
According to the report, the CPI increased by 3% year over year (YoY) in January. This represents a 2.9% increase from December and is the highest monthly increase since August 2023.
What Categories Experienced the Highest Surge?
Unsurprisingly, the main categories that remained elevated in January are food, health insurance, and fuel.
Food
Prices of food like eggs jumped 15.2% monthly (a yearly increase of 53%), coffee and orange juice also increased. Moreover, grocery prices hiked 0.5% MoM and 2% YoY.
Healthcare
Healthcare costs in the US continue to rise, with a 4% increase in health insurance costs since January 2023 and a 0.7% increase from last month. Prescription drug prices rose 2.5% MoM and 4.5% from the year ago, while home healthcare and nursing home care costs increased 8% and 3.5% YoY, respectively.
Driving
Used car prices surged 2.2% in January, while new car prices remained unchanged. Automotive insurance, on the other hand, rose 2% MoM and 12% YoY.
Given the less-than-rosy results, it may be helpful to keep track of any new developments in the US and global economies. Additionally, it is important to observe how these results will impact the financial markets in the future. (Source: Yahoo Finance)
How Did the Markets React to the CPI Report?
Following the inflation release, major Wall Street indices plunged on Wednesday, with the S&P 500 and the Dow Jones Industrial Average losing 0.27% and 0.50%, respectively.
Still, it is important to note that past performance does not reflect future results and that only time will tell what the financial markets will face.
Conclusion
In conclusion, the February 2025 US CPI report underscores the persistence of high inflation, with significant price hikes in essential categories like food, healthcare, and automotive sectors.
Despite a slight dip in major US stock indices following the report, the overall economic outlook remains uncertain as inflation continues to challenge consumers and policymakers alike.
While inflation shows signs of slowing in some areas, the substantial monthly increases in certain goods suggest that prices may take longer to stabilise.
Traders and analysts will need to closely monitor further developments to gauge the long-term impact on the economy and financial markets.
