July CPI report should show that inflation is accelerated in the middle of tariff pressures
The July consumer price index (IPC) should show that prices have increased to a faster clip each year compared to June. The report, due Tuesday at 8:30 a.m., comes as investors remain attentive to the quantity of prices of President Trump are starting to affect consumer costs.
According to Bloomberg data, the CPI title should have increased by 2.8% from one year to the next in July, against an increase of 2.7% in June. On a monthly basis, prices should increase by 0.2%, a slight slowdown compared to the gain of 0.3% of June, driven by the drop in petrol prices and the expectations of moderately softer food inflation.
As a “nucleus”, which removes volatile food and energy prices, the annual inflation rate for July should stick up to 3.0% compared to 2.9% of June, which indicates that the increase in the inflation of goods is no longer offset by the relaxation of the inflation of services.
Basic prices should also increase by 0.3% of months in months, exceeding the increase of 0.2% previous observed in June and marking the strongest gain in six months.
In June, signs of pricing costs have emerged, the prices of clothing up 0.4% on a monthly basis and the increase in shoes increasing by 0.7% after several months of decline. The prices of furniture and bedding also won 0.4%, overthrowing a 0.8% drop in May, another signal that these higher costs are starting to reach consumers.
Find out more: What Trump’s prices mean for the economy and your wallet
“The CPI of July will bring other signs of higher prices that push prices,” the economist of Wells Fargo last week. “It is still at the start of the price adjustment process to see how higher import taxes will ultimately be distributed between the end customer, interior sellers and foreign exporters.”
“At the same time, the growing fatigue of consumers makes the price increase in general,” added House. “We continue to expect inflation to resume, but not the clicking above, during the second half of the year, with the basic ICC and the basic return PCE defector at around 3% in the fourth quarter.”
Tuesday’s report is expected to arrive in the midst of current commercial developments which could still modify the actual American rate rate, now oscillating almost 18.6% – the highest since 1933, according to the last estimate of the Yale budget laboratory.
However, the markets are betting more and more that the central bank will reduce interest rates at its September meeting, largely by concerns concerning the health of the American labor market after significant decline revisions, in parallel with persistent inflation.
“CPI could leave [the] Fed with two headaches, “wrote Citi Stuart Kaiser analyst in an overview of the report, adding that investors will probably focus on updating the basic prices of goods.
