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Macro Flash Report

Inflation Data

Takeaway:

July’s inflation data was a welcome signal for a market eager to see the FOMC begin cutting rates. Of the data released YoY Core CPI stands out, down for the 4th straight month. This all but cements the expected September interest rate cut which will be a catalyst for an industrial sector looking for a spark.

Topline CPI (dotted), Core CPI (solid), & Core PPI (solid)

Core CPI (Ex Food & Energy) YoY eased to 3.2%, its lowest annual pace in over three years, down from 3.3% in June and aligning with market expectations. On a monthly basis, Core CPI rose by 0.2%, a tick up from June’s 0.1%, meeting forecasts.

  • YoY: The shelter index increased by 5.1%, slightly down from 5.2% in June. Other categories, such as motor vehicle insurance and personal care, also saw slower price
  • MoM: Shelter costs climbed by 0.4%, compared to 2% in June, while transportation services rebounded with a 0.4% rise after a decline in June.

CPI YoY increased 2.9%, down from 3.0% in June and below the anticipated 3.0%. Month-over-month, CPI rose 0.2%, up from -0.1% in June and matching expectations.

  • Nearly 90% of this monthly advance was driven by higher shelter costs. Energy and new vehicles were among sectors that experienced declines.

Core PPI (Ex Food & Energy) YoY rose 2.4%, notably down from June’s 3.0% and well below the forecasted 2.7%. The monthly Core PPI was unchanged, the tamest reading in four months, slowing from the 0.3% in June and missing the expected 0.2%.

  • This easing was mainly due to a decline in
  • The categories that feed into PCE suggest

PPI YoY increased 2.2%, easing from an upwardly revised 2.7% in June and below the anticipated 2.3%. Month-over- month, PPI edged up by 0.1%, following a 0.2% increase in June, again falling short of the forecasted 0.2%.

  • Goods prices saw a significant 6% rise, the largest since February, driven largely by a 1.9% increase in energy costs.
  • Conversely, service prices fell by -0.2%, the steepest drop since March 2023, largely due to a -1.3% decrease in trade services.