Piece by Alexander Weiss, Trive Financial Market Analyst
Market investors worldwide seem to have received positively the US CPI dribble down towards the FED’s much-desired 2% goal rate, propelling equities futures higher as inflation comes in cooler than predicted. Inflation and interest rates remain on everyone’s radar.
The annual U.S. CPI statistic for June comes in at 3%, slightly below predictions and down from 4% in May. The Consumer Price Index for All Urban Consumers (CPI-U) grew by 0.2% in June after increasing by 0.1% in May on a seasonally adjusted basis. The monthly increase in all products is still primarily driven by the index for housing, while the inflation rate for food rose by 5.7% over the previous 12 months. Even though the all-items index came in at 3% for June, which was below forecasts, it is important to remember that the all-items index excluding food and energy remained high at 4.8% for the month. This is mainly because energy prices have dropped by about 16.7% over the past 12 months.
The FED may decide to increase interest rates by an additional 25 basis points at its upcoming interest rate meeting even though headline inflation looks to be on a continuous downward path. Core inflation, which is defined as headline inflation less food and energy prices, also seems to be sticking around.
Sources: Bloomberg, U.S. Bureau of Labor Statistics, Trading View
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