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MNI US Inflation Insight, Jul'23: Genuinely Softer Price Pressures

EXECUTIVE SUMMARY

  • Core CPI inflation was clearly softer than expected in June at 0.16% M/M (cons 0.3), breaking a particularly resilient run of 0.4% or higher prints seen since December.
  • The bulk of the slowdown relative to June came from used cars as flagged, but most eye-catching was a core services non-housing figure at exactly 0.00% M/M after 0.24% in May.
  • Weakness was led by airfares and lodging away from home, which limited some of the dovish reaction, but nevertheless has prompted a renewed focus on the timing of cuts - see the section summarizing 22 sell side analysts.
  • A July Fed hike seems locked in and there isn’t much by way of further hikes priced beyond that contrary to Fed dot plot suggestions. However, we won’t be surprised to hear Fedspeak on the need to see sustained improvement in the data and not be caught out by one monthly release after a similar improvement in July.

PLEASE FIND THE FULL REPORT HERE:

USInflationInsightJul2023.pdf


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