MNI BRIEF: July CPI Shows Pressures Receding - Atl Fed Note

The July CPI report "further suggests that inflationary pressures are receding, and a more normal pricing environment is beginning to take root," Atlanta Fed economist Brent Meyer said in a note shared with MNI.

Headline CPI rose at an annualized 2.0% last month and at an annualized rate of just 1.9% over the past three months, down sharply from its year-over-year growth rate of 3.2%, while core CPI rose 1.9% annualized in July, pulling its three-month annualized growth rate down to 3.1%, compared to the 4.7% year-over-year rate. Alternative measures of underlying inflation were "a touch higher, but broadly in line" with the core CPI reading, he noted.

The so-called supercore measure of inflation, or core services less rent of shelter, rose at an annualized rate of just 2.0% over the past three months, "a tick lower than its historical average," Meyer said. If the supercore stays in this range and rents decelerate to the 3%-4% range as many economists expect, "it’s possible that we could cover that last mile fairly quickly," he said. "Admittedly, that’s a bit overly optimistic on my part, but mathematically feasible." (See: MNI INTERVIEW: US Disinflation In Train But Economy Overheated)