US CPI Climbs Higher, Markets Still Anticipate Fed Rate Cut in September

According to data released by the Labor Department on Tuesday, US CPI rose 0.3% higher in July after rising 0.1% higher last month

Arslan Butt•Wednesday, August 14, 2019•1 min read

According to data released by the Labor Department on Tuesday, US CPI rose 0.3% higher in July after rising 0.1% higher in the previous two months. Over the past year till July 2019, CPI had grown by 1.8%, compared to 1.6% in June, beating expectations for a 1.7% rise YoY.

Core CPI, excluding high volatility components like food and energy costs, have also risen 0.3% higher in July vs. +0.3% in June. It was for the first time since 2001 that core CPI has climbed higher for two consecutive months. On an annualized basis, core CPI has risen 2.2% YoY vs. +2.1% in June.

Although CPI edged closer to Fed’s 2% target for inflation, the ongoing trade tensions between the US and China continue to support market expectations for an additional 0.25% rate cut by the Fed in September.

Core inflation in the US has grown to 2.8%, the highest reading in eight years while the core PCE index climbed 1.6% higher YoY in June. The core PCE index is keenly watched by the Fed when setting inflationary targets for the US economy.

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ABOUT THE AUTHOR See More

Arslan Butt

Index & Commodity Analyst

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.