Markets await July CPI figures, with core inflation expected to remain above the Fed’s 2% target despite easing energy prices.
The US Consumer Price Index for July is projected to rise 0.1% month-over-month and 3.4% year-over-year, a slight deceleration from June’s 3.5% annual gain. Core CPI, excluding food and energy, is forecast at 0.2% monthly and 2.5% annually, down from 2.6% in June but still above the Federal Reserve’s target.
June’s report showed softer inflation, but July’s data is expected to align with recent trends. Falling energy prices may weigh on headline inflation, while core prices remain stubbornly elevated. Persistent core inflation could limit dovish Fed repricing, though a miss on estimates may fuel rate-cut expectations.
Equities may rally on weaker-than-expected data, offering relief after recent volatility. A benign report would provide clarity on the Fed’s next moves, though markets remain cautious amid mixed signals from policymakers.