Headline CPI was restrained by muted meals inflation, weaker vitality costs, however core CPI inflation picked as much as the quickest tempo year-to-date, pushed by reaccelerating providers prices however held again partly by subdued items inflation, UOB Group’s Senior Economist Alvin Liew notes.
US headline and core inflation are available barely combined
“US headline CPI got here in barely beneath expectations at 0.2% m/m, 2.7% y/y (versus Bloomberg est: 0.2% m/m, 2.8% y/y), whereas core CPI was greater at 0.3% m/m, 3.1% y/y (versus Bloomberg est: 0.3% m/m, 3.0% y/y), the very best since February.”
“Inflation was primarily pushed by providers and shelter prices, whereas tariff-related items confirmed average value will increase, suggesting a muted pass-through impact for now. We hold our 2025 US headline CPI inflation forecast at 3.6% and our core CPI inflation projection can be unchanged at 3.8% however dangers of downward revision exist because of the prolonged China tariff pause and potential weakening in client demand and labor market. We proceed to imagine the tariff-driven inflation to be a one-time value shock earlier than coming off someday subsequent yr.”
“Markets cheered the Jul inflation prints, and bolstered expectations for the Fed to renew easing in September. We proceed to carry our view of three 25-bps cuts in 2025, to be executed on the Sep, Oct and December FOMC conferences. This may deliver the FFTR to three.75% (higher sure) by end-2025.”
