Recent data shows that inflationary pressure in the US is easing, with consumer prices rising by 0.2% in July compared to June. This increase includes both overall prices and prices excluding energy and food (core rate). While service prices saw a slight uptick, goods prices experienced a sharper decline. Experts predict that this data supports the forecast of a first Fed rate cut in September, according to Commerzbank’s economists Bernd Weidensteiner and Dr. Christoph Balz.
Analysis of the Data
US consumer prices rose by 0.2% in July, with the year-on-year rate dropping from 3.0% to 2.9%. The core rate, which excludes energy and food prices, also saw a 0.2% increase, bringing the year-on-year rate down from 3.3% to 3.2%. While this report aligns with consensus expectations, it also highlights a trend of favorable inflation reports over the past few months.
The data reveals that consumer prices have only risen at an annual rate of 0.4% over the last three months, excluding energy and food prices, which have increased by 1.6%. Despite some volatility in prices for items like used cars and airline tickets, rental inflation remains relatively stable but on a downward trend. Overall, inflationary pressure is expected to decrease further in the coming months.
Impact on Investors and Consumers
For investors, the anticipated Fed rate cut in September could signal a shift in the market and impact investment strategies. Lower interest rates may present opportunities for certain sectors while posing challenges for others. Consumers may also see the effects of easing inflation in their everyday expenses, with potential changes in pricing for goods and services.