**MNI 5 THINGS: US July CPI +0.2%, Core +0.2%, As Expected>

--5 Things We Learned From The July CPI Data

By Kevin Kastner, Shikha Dave, and Harrison Clarke

     WASHINGTON (MNI) - The following are the key points from the 

Consumer Price Index data for July released by the Bureau of Labor 

Statistics Friday: 

     - July CPI rose 0.2% month/month overall, as expected by analysts 

and the markets, but before rounding it was +0.171%, on the low side of 

0.2%. Core prices were up 0.2% rounded, as expected but were up 0.243% 

before rounding close to being rounded up to 0.3%.  

     - The large owners' equivalent rents category rose 0.3% and new 

vehicle prices rose 0.3%, while used vehicle prices rose 1.3% and 

lodging away from home prices rose 0.4%. Providing some offset, apparel 

prices were down 0.3%. 

     - As highlighted in an MNI 5 Things, analysts have a track record 

of missing July core CPI to the high side, but they actually missed to 

the low side this year when the percent change is seen unrounded. The 

data suggest gains for core PCE prices when they are released later in 

the month. 

     - The y/y rate for headline CPI stayed at 2.9% as in June. At the 

same time, the y/y rate for core CPI rose to 2.4% from 2.3%, the highest 

since September 2008. Overall, the data suggest steady gains in 

inflation that will allow the FOMC to continue on its gradual rate hike 

path. 

     - Energy prices fell by 0.5% in July after a 0.3% decrease in June, 

with gasoline prices down 0.6%, electricity prices down 0.4%, and gas 

utilities prices down 0.5%. Energy prices were actually down 0.9% 

unadjusted, so seasonal adjustment factors had expected a smaller 

decline in mid-summer than actually occurred. CPI excluding only energy 

was up 0.2%, while food prices rose 0.1%. 

     ** MNI Washington Bureau: 202-371-2121 ** 

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