This morning's CPI
ECO - The July CPI came in largely in line with
our expectations; rising gasoline prices drove a 0.3% gain in headline prices
after a 0.1% decline, and core prices rose 0.1% leaving the annual rate of
increase at 0.9% for the foruth month in a row. On an unrounded basis core
inflation slowed to 0.87% y/y from 0.90%. On an NSA basis the report was on the
weak side as food prices fell 0.1% leaving the NSA at 218.011, below our
forecast of 218.227. Within core, the factors that have driven the
stabilization in May and June remained in place in July as owner's equivalent
rent rose 0.059% after a 0.08% increase a month prior, apparel rose 0.6% after
a 0.8% gain and tobacco prices went up 1.6% after a 1.0% gain. Nothing in
backdrop of the housing market, consumer spending, or resource utilization
suggests that the downward pressures have abated and thus we expect further
softness in core prices the months ahead. However the report removes a
potential source of immediate pressure on the Fed as the stabilization they are
expecting in core prices is currently playing out in the data.
From Senior Economist at BNP Paribas
our expectations; rising gasoline prices drove a 0.3% gain in headline prices
after a 0.1% decline, and core prices rose 0.1% leaving the annual rate of
increase at 0.9% for the foruth month in a row. On an unrounded basis core
inflation slowed to 0.87% y/y from 0.90%. On an NSA basis the report was on the
weak side as food prices fell 0.1% leaving the NSA at 218.011, below our
forecast of 218.227. Within core, the factors that have driven the
stabilization in May and June remained in place in July as owner's equivalent
rent rose 0.059% after a 0.08% increase a month prior, apparel rose 0.6% after
a 0.8% gain and tobacco prices went up 1.6% after a 1.0% gain. Nothing in
backdrop of the housing market, consumer spending, or resource utilization
suggests that the downward pressures have abated and thus we expect further
softness in core prices the months ahead. However the report removes a
potential source of immediate pressure on the Fed as the stabilization they are
expecting in core prices is currently playing out in the data.
From Senior Economist at BNP Paribas
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