CPI Rises on Sharp Jump in Gasoline Prices; Sentiment Weakens

Nichole Harper
16 Mar, 2012
New York City

U.S. stocks wavered in early trading after consumer price index increased 0.4% in February and confidence edged lower in March. Bank stocks were in focus after investors reassessed the data from the latest stress tests from the Fed. Crude oil prices rose and Treasuries edged lower.

[R]11:05 AM New York – U.S. stocks wavered in early trading after consumer price index increased 0.4% in February and confidence edged lower in March. Bank stocks were in focus after investors reassessed the data from the latest stress tests from the Fed. Crude oil prices rose and Treasuries edged lower.[/R]

Stocks wavered in early trading in New York after consumer price index rose on a surge in retail gasoline prices and knocked off the consumer sentiment.

Markets indexes in Europe traded near a 30-week peak and crude oil prices rebounded on the rising global demand in emerging markets.

Bank stocks were in focus after investors reassessed the latest stress tests results from the Fed and U.S. Treasuries declined at the fastest pace in four months after investors lifted the expectations of higher growth in the U.S.

CPI Rises 0.4%

Consumer prices increased at the fastest pace in ten months after the cost of fuel jumped and accounted for the most of the gain.

The broadest measure of inflation, the Consumer Price Index increased 0.4% in February and retail gasoline prices increased 6% and food prices were flat. The CPI increased 0.2% in January.

Excluding food and energy costs, prices rose 0.1%.

The cost of energy increased 3.2% from the previous month and gasoline price jumped 6%, the fastest increase since December 2010.

In the 12 months to February, the index increased 2.9% matching the annual gains in the previous month and core price increase declined to 2.2%.

The measure of inflation that includes 60% weight in services prices is widely perceived to understate the inflation experienced by most families in urban settings.

Costs of medical, education and business services rose 7.3%in 2011 according to data tracked by Ticker.com in 20 largest metropolitan areas.

Consumer Sentiment Falls

Consumer sentiment index declined to 74.3 in March. The preliminary reading for the month declined for the first time since August. The University of Michigan/Thomson Reuters sentiment index declined from 75.3 in January and declined after gasoline prices continue to advance in the year near 20%.

The current conditions index, that shows the estimates of the present financial situation, increased to 84.2 from 83 in February.

In a separate report released by the Fed, industrial output of factories, mines and utilities was flat in February and production was revised higher to 0.4% increase from the previous estimate of unchanged in January.