Even though the headline inflation figure managed to match expectations of 0.40% annualized growth through the end of January, the real news for the consumer price readings overnight were the gains in core inflation. The measure, which traditionally strips away the more volatile food and energy components rose by 0.10%, beating estimates of 0.00% and the prior month’s reading of -0.20%.
This latest print marked the first positive reading since December of 2015, driven primarily by an improvement in prices for transportation, communication, clothing, and recreation. Adding to the resounding positivity of the inflation figures was a modest improvement in unemployment which fell from 3.10% to 3.00% during January.
However, the slide in household spending could bode poorly for inflation down the road after declining -1.20% year over year.
After rising the last four sessions, USDJPY is facing a pullback in momentum, trending towards 114.000.