The July Consumer Price Index (CPI) report showed U.S. inflation continued to moderate, with the headline CPI rising by 2.9% year-over-year (YoY), slightly below the 3.0% expected by economists, marking the smallest 12-month increase since March 2021. The core CPI, which excludes food and energy, increased by 3.2% YoY and 0.2% month-over-month (MoM), both in line with expectations. The report is seen as a pivotal indicator for the Federal Reserve, likely sealing the case for an interest rate cut at its next meeting in September, as inflation continues to trend closer to the Fed's 2% target.
Shelter costs remained a significant contributor to inflation, with the shelter index rising by 0.4% MoM, accounting for nearly 90% of the monthly increase in the all-items index. Over the past year, shelter costs have increased by 5.1%, making up over 70% of the total increase in core inflation. Energy prices, on the other hand, were unchanged in July after declines in the previous two months, while the food index saw a modest 0.2% increase, consistent with June's figure.
Within the food category, notable increases were observed in the prices of meats, poultry, fish, and eggs, which rose by 0.7% in July, with the eggs index surging by 5.5%. In contrast, the cereals and bakery products index, along with the dairy and related products index, both declined by 0.5% and 0.2% respectively. Over the past year, food at home prices have risen by 1.1%, while food away from home saw a larger increase of 4.1%.
Energy prices remained stable in July, with the gasoline index unchanged after a 2.0% decrease in June. However, over the past 12 months, the energy index has risen by 1.1%, with electricity prices up 4.9% and natural gas prices increasing by 1.5%. The stabilization of energy prices in July, following months of volatility, provided some relief but continued to contribute to the overall inflation landscape.
The July CPI report's data on shelter, energy, and food prices will likely influence the Federal Reserve's upcoming decisions. The moderation in inflation, particularly in core categories, supports the case for a potential rate cut in September. Fed Chair Jerome Powell has previously indicated that favorable inflation data would be a key factor in determining the central bank's next steps, and this report aligns with those expectations.
July CPI data seals the deal for a fed cut in September
byu/BobbyFuckkingAxelrod inwallstreetbets
Posted by BobbyFuckkingAxelrod
6 Comments
I dont think a rate cut will have the effect you think it will.
Excluding food and shelter lol the main inflationary pressures, they’ll revise this and there won’t be any significant cuts. As soon as Israel goes into Lebanon gas will go up pushing inflation back up before the end of the year
Fed’s not cutting rates anytime soon. Inflation’s still too high and the job market’s hot. They’ll hold steady for now.
 Fed ain’t cutting rates till December at the earliest. This was an abysmal report with future forecasts rising like a rocket to the moon 🚀🚀
The goal is not to cut rates. The goal is to stabilize both unemployment and inflation to a stable level. Today’s reading shows that we are at a stable level to balance inflation perfectly and therefore there is no reason to play with rates, based on that data.
HOWEVER– unemployment is also ticking up. *this* will be the reason for a rate cut, to stabilize the other side of the Fed’s mandate (employment).
