July CPI data aligns with expectations, easing pressure on the Fed as core inflation cools slightly from prior months.
US consumer prices rose 3.4% year-over-year in July, unchanged from June and matching economist forecasts. Monthly inflation increased 0.1%, also in line with expectations, following a 0.4% decline in June.
Core CPI, excluding food and energy, rose 2.5% annually, down from 2.6% in June, while the monthly core reading held at 0.2%. Shelter costs remained subdued, with owners’ equivalent rent up 0.24% and primary residence rent rising 0.15%.
Markets had priced in a 44% chance of a September rate hike ahead of the report, with 24.4 bps of tightening expected for the year. USD/JPY traded at 159.04 before the release.