Markets await July CPI data showing softer inflation, potentially easing pressure on the Federal Reserve to hike rates further.
The US Consumer Price Index for July is expected to show annual inflation easing to 3.4% from 3.5% in June, with monthly CPI rising 0.1% after a 0.4% decline. Core CPI, excluding food and energy, is forecast to increase 0.2% month-over-month and 2.5% year-over-year.
June’s inflation drop was driven by a 20% decline in crude oil prices, which returned to pre-war levels following a US-Iran ceasefire. However, TD Securities warns of potential upside risks, citing a rebound in services inflation and core goods after June’s temporary weakness.
Investors will scrutinize the data for clues on the Fed’s next move, with markets pricing in a slower pace of rate hikes amid cooling inflation pressures.