The CPI reading came below market expectations of 3.3%.
July’s Consumer Price Index (CPI) data has been released by the US Bureau of Labour Statistics (BLS). The latest report points to a slight increase in headline inflation in the previous month.
CPI data show inflation lost its grip
The BLS released its July report today amid a slowing crypto market.
The July data shows that inflation rose 3.2%, 0.1% below the expected 0.2%. Core CPI also hit 4.7%. This came in hotter than June’s 3%, giving room to the Federal Reserve to remain hawkish.
The slight increase points to the possibility of economic stability. The figures also show that the wider crypto market must begin to look at potential monetary policy and market behaviour.
JP Morgan estimated 3.4% CPI inflation. While 3.2% was the projection of other Wall Street giants including Goldman Sachs, Barclays, HSBC, and UBS. Inflation was predicted by BMO, Bloomberg, Citigroup, Credit Suisse, Morgan Stanley, and Visa to be consistent at 3.3%.
Traders now anticipate a greater than 90% chance of a pause at the September Federal Reserve meeting, up from an 84% half an hour before the publication.
Read more: CPI cools down in May, indicating Fed may hold rates steady
Cooled economy
“Inflation is cooling, but the path down is still expected to be bumpy and littered with potholes,” says Diane Swonk, chief economist of KPMG Economics.
Apart from shelter which rose 0.4%, the new data shows an economy that has cooled down from the skyrocketing price increase over the last two years. Cost of goods fell, medical and energy prices also struggled to clamber up. Used vehicles prices also declined 1.3%.
The market reacted positively to the news with Dow Jones Industrial Average surging more than 200 points and Treasury yields mostly lower.
It’s not yet sayonara to inflation, but the market can look towards the Feds holding interest rate steady.
“It is not quite ‘mission accomplished’ yet, but significant progress on the inflation front has been made,” said Sung Won Sohn, chief economist at SS Economics and professor of economics and finance at Loyola Marymount University. “On balance, the inflation picture has improved significantly. The Federal Reserve will stop raising the interest rate soon.”
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