• The headline rate of YoY CPI hit 6.8% in November, in line with expectations. 
• The dollar dropped given markets had been positioning for an upside surprise prior to the release.  

Inflation in the US, as measured by the Consumer Price Index (CPI), rose to 6.8% on a yearly basis in November from 6.2% in October, the US Bureau of Labor Statistics reported on Friday. That was in line with the median economist forecast. The MoM pace of price increases as per the CPI came in at 0.8%, above expectations for a MoM gain of 0.7%, but a slight deceleration from October's 0.9% MoM reading.

In terms of the Core CPI, that came in at 4.9% YoY, also in line with expectations and up from October's YoY reading of 4.6%. The MoM rate was in line with expectations at 0.5%, a slight deceleration from the 0.6% MoM rate of core price growth in October. 

Market Reaction

The dollar has come under selling pressure in wake of the broadly as expected CPI figures, with the DXY dropping back towards 96.00 from above 96.40 prior to the data. Analysts noted that markets had appeared to be positioning themselves for an upside surprise in the run-up to the data, with some citing comments from US President Joe Biden on inflation on Thursday as hinting towards a higher than expected inflation reading. To recap, Biden commented on Thursday that some of the recent declines in energy prices would not have fed into the CPI yet - some saw this as him attempting to pre-emptively play down fears about higher than expected inflation.