July CPI Report Offers Fed a Reprieve from Rate Hike Pressure
The US Consumer Price Index (CPI) report for July showed inflation rising modestly, matching economists' expectations. The headline CPI increased by 0.1% from the previous month, while core CPI rose 0.2%. Both readings were in line with forecasts.
On an annual basis, headline CPI was up 3.4%, and core inflation was at 2.5%. These figures remain above the Federal Reserve's 2% inflation target, but the data suggests that some price pressures may be losing momentum.
The energy index fell by 1.5% in July, with gasoline prices being a major contributor to this decline. Despite recent monthly declines, energy prices were still substantially higher than a year earlier, up 14.7% over the past 12 months.
Market reaction to the report was muted, with US stock futures ticking higher following the release. JPMorgan's trading desk had anticipated a core inflation reading between 0.2% and 0.25%, which would likely lift the S&P 500 by between 0.25% and 0.75%. However, Steve Ryder, senior fixed-income portfolio manager at Aviva Investors, said the report was unlikely to trigger an immediate policy shift.