Inflationary pressure continues to ease in the US. Consumer prices rose 0.2% in July compared to June, both overall and excluding energy and food (core rate). While services prices rose slightly more than expected, goods prices fell more sharply. The data support our forecast for a first Fed rate cut in September, say Commerzbank economists Bernd Weidensteiner and Dr. Christoph Balz.
First Fed rate cut expected in September
“US consumer prices rose 0.2% in July compared with the previous month. The year-over-year rate fell to 2.9% from 3.0%. The core rate, which excludes volatile energy and food prices, also stood at 0.2%. The year-over-year rate here fell to 3.2% from 3.3%. The report was therefore in line with consensus expectations and our forecast.”
“In our preview, we noted that while the headline expectation of a 0.2% monthly rate was realistic, the data would likely only round up to 0.2%. In fact, the monthly rates were 0.15% (headline) and 0.17% (core rate). This continues the string of favorable inflation reports. Over the past three months, consumer prices have risen at an annual rate of just 0.4%, excluding energy and food by 1.6%.”
“The only weak point in the report is that typically very volatile (and therefore uninformative) prices, such as those for used cars and airline tickets, have significantly dampened price increases, while rent increases, which are actually quite stable, have again contributed somewhat more to inflation. However, rental inflation remains on a downward trend. Therefore, inflationary pressure should tend to ease further in the coming months.”
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
