July US Consumer Prices (CPI) Rose 0.1%, 4th Successive Headline Miss

Andrew Cummings
August 11, 2017

The U.S. consumer price index edged up just 0.1 percent last month after being unchanged in June.

Apparel prices did increase on the month, but still registered an annual decline.

"The soft monthly numbers (helped by a drop in autos) should be supportive for fixed income and negative for the US$", CIBC adds. The so-called core CPI rose 1.7 per cent in the 12 months through July - it has now increased by the same margin for three straight months.

Fed Chair Janet Yellen told lawmakers last month that "some special factors", including prices for mobile phone plans and prescription drugs were partly responsible for the low inflation readings.

Excluding energy and food prices, core PPI fell by 0.1% month-on-month, while analysts anticipated the index to rise by 0.1 percentage points to 0.2%.

USA consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

The report said consumer prices in July were up by 1.7% compared to the same month a year ago, reflecting a modest acceleration from the 1.6 year-over-year growth in June.

Market confidence in higher inflation has gradually eroded over the past 2-3 month, especially with a series of slightly weaker than expected inflation reports.

Prices for final demand services decreased 0.2% in July, the first decline since February. Economists polled by Reuters had forecast the CPI rising 0.2 percent in July.

Yet Dudley, a close ally of Fed Chair Janet Yellen and permanent voter on US monetary policy, said the declining dollar, which pushes up import prices, and the tightening labor market, which raises wages, "should combine to eventually push (month-over-month) inflation up".

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