Soft U.S. Inflation Data Weighs on Fed Hike Bets
The July U.S. inflation data released today showed a moderate increase in consumer prices, which has weighed on Federal Reserve hike bets.
The Consumer Price Index (CPI) rose by 0.1% month-over-month and 3.4% year-over-year, matching forecasts. However, the annual rate slowed from 3.5% in June, indicating a slight decrease in price pressures.
The core CPI increased by 0.2% month-over-month, while on an annual basis it slowed to 2.5% from 2.6%, the lowest level in several years. The energy component showed a noticeable 1.5% month-over-month decline, while shelter costs rose by only 0.1% and accounted for around two-thirds of the overall monthly CPI increase.
The report's structure showed that inflation remains a concern, with energy costs still 14.7% higher than a year ago. Despite this, the data was not strong enough to confirm the need for another tightening of Fed policy.