Treasury Yields Dip after CPI Report Shows Inflation Declined in December

The financial markets led by U.S. Treasury yields are being whipped around on Thursday following the release of a government report that showed consumer prices fell 0.1% in December, in line with expectations from economists.

The Labor Department reported that inflation finished 2022 with a modest pullback with consumer prices posting their biggest monthly decline since April of 2020.

On a monthly basis, the consumer price index (CPI), which measures the cost of a broad basket of goods and services, fell 0.1% in December, in line with the Dow Jones estimate. That move equated to the largest month-over-month decrease since April 2020 when much of the country was in lockdown due to government COVID restrictions.

Despite the monthly decline, headline CPI still rose 6.5% annually, bringing attention to the persistent burden that the rising cost of living has placed on U.S. households. Nonetheless, the figures represented the smallest annual increase since October 2021.

Excluding volatile food and energy prices, so-called Core CPI rose 0.3%, also meeting the forecast. It was up 5.7% from a year ago, once again in line.