The US dollar banknotes have been seen in this illustration of 7 November 2016. REUTERS / Dado Ruvic / Illustration
NEW YORK (Reuters) – The dollar equalized the Japanese yen again and extended losses against the euro after US consumer prices showed that inflation remains low despite a tight labor market , reinforcing the Federal Reserve's argument to keep interest rates suspended.
The consumer price index rose for the first time in four months in February, but the pace of the increase was modest, resulting in the lowest annual gain in almost 2-1 / 2 years. The dollar index, which measures the greenback against a basket of six rivals, fell, and fell 0.17 percent on the day to 97.054.
The euro was 0.27% stronger than the dollar, the last price was $ 1.1775. Against the Japanese yen, which like the dollar acts as a safe investment in periods of economic and political volatility, the dollar was 0.05% stronger at 111.13 yen, reducing previous gains. As the greenback goes up in value, the number of yen required to buy a dollar increases.
The Fed cited a lack of inflationary pressure as one of the reasons why it felt at ease in suspending the interest rate growth cycle. The central bank uses the price index for personal consumption expenses (CPE) to track inflation against its 2% target. However, the IPC offers information on the state of inflation in the United States.
The Department of Labor said today that its consumer price index rose 0.2 percent, boosted by the gains in food, gas and rent costs. The CPI had remained unchanged for three consecutive months. Excluding the volatile components of food and energy, the CPI grew by 0.1 percent, the lowest increase since August 2018.
In the 12 months to February, the core IPC rose 2.1%. The core IPC had risen 2.2% for three consecutive months on an annual basis. Economists interviewed by Reuters had predicted that the IPC and the IPC core would grow 0.2% in February.
The slowdown in internal and global growth is keeping inflation under control, even if a tight labor market is increasing wages. Annual salary growth rose 3.4% in February, the largest increase since April 2009, from 3.1% in January.
Reporting by Kate Duguid and Gertrude Chavez; Editing by Susan Thomas