Inflation in the US showed decelerating trends in July, which, although it remained at extremely high levels, was measured significantly lower than last month and also the market estimates.
In particular, the Consumer Price Index increased in July at an annual rate 8.5% retreating significantly from a 40-year high at 9.1% of June, at a time when analysts were expecting a milder retreat in 8.7%.
On a month-on-month basis, inflation was unchanged in July after a 1.3% jump in the previous month, against estimates for a modest increase of 0.2%.
At the same time, the structural part of the Index, which does not include the highly volatile food and energy prices, remained unchanged on an annual basis in 5.9% versus market estimate for acceleration to 6.1%.
On a month-by-month basis, structural inflation strengthened slightly by 0.3%however moving significantly lower than 0.7% which had preceded in June.
Significantly, after the data was released bets on the Fed’s next move in September completely reversed, with the odds of another giant 75 basis point rate hike plummeting to 32% from 68% before announcements.
It was a similar picture on Wall Street, with the market celebrating the data as futures of all three indexes jumped, with those of the Dow Jones adding more than 400 points.
As the individual data of the measurement showed, an important role in the de-escalation of inflationary pressures was played by the large reduction in the price of fuel, with that of gasoline having fallen by 7.7%, presenting its biggest drop since April 2020 of the pandemic.
Which offset food cost increases of 1.1% and housing costs of 0.5% (softer than last month’s 0.6%).
In addition, used car prices fell by 0.4% and airline tickets by 1.8%.
Despite the downward trend shown by the data, however, inflationary pressures are still extremely strong in the US economy.
Indicatively, the food index has risen by 10.9% over the past 12 months, the fastest rate seen since May 1979. Electricity prices – up 1.6% in July – are at +15 .2% from last year, while overall the energy price index is up a whopping 32.9% from the same period last year.
Source: Capital
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