NEW YORK: The US dollar was volatile on Wednesday morning after inflation data showed a surge in consumer prices in April, as it struggled to hold the gains it initially notched on the data release.

The dollar index, which measures the US currency against a basket of rivals, was last up 0.25% on the day to 90.437, having risen as high as 90.665 immediately following the consumer price index report.

Rising prices typically strengthen the dollar because the market believes the Federal Reserve will raise interest rates to quell inflation. But Fed Chair Jerome Powell has pledged to keep rates anchored and to allow inflation to run higher for a period.

The Labour Department report on Wednesday showed US consumer prices increased more than expected as booming demand in the reopening economy pushed against supply constraints.

The boomeranging dollar pulled other G10 currencies with it, ultimately leaving the euro 0.42% weaker at $1.210. The single currency on Tuesday had hit a 2-1/2 month high. The Japanese yen was 0.54% weaker on the day at 109.225 and the British pound was modestly weaker, down 0.14% to $1.412.

In the digital space, cryptocurrency ether was roughly 2.93% higher on the day, having backed off a record level of $4,372.35 set earlier in the day.