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U.S. Inflation Slows by More Than Expected in July as Fed Eyes Future Rate Hikes

Economic Indicators Aug 10, 2022 08:30AM ET
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By Scott Kanowsky

Investing.com -- Inflation in the U.S. eased by more than expected in July, but remains around its highest level in four decades despite aggressive monetary tightening from the Federal Reserve.

The July consumer price index showed an uptick of 8.5% compared with the same month last year, while the reading came in at 0.0% versus June. The figures are down from the prior red-hot rise of 9.1% annually and 1.3% month-on-month in June.

Economists had estimated an annual rise of 8.7% and a monthly increase of 0.2%.

Meanwhile, core CPI - which takes highly volatile food and energy prices out of the index - posted a smaller monthly uptick of 0.3% against 0.7% in June and remained steady at 5.9% on a yearly basis.

The annual deceleration is unlikely to change the narrative for the Fed, which has rolled out a series of large interest rate hikes in a bid to quell soaring inflation. The Fed has previously said that it will need to see several months of declines in CPI growth before it pumps the brakes on increasing borrowing costs.

The central bank still has a set of August economic indicators to mull over ahead of its next rate decision, but investors will be looking for an initial to reaction to Wednesday's data in comments later today from Fed officials Charles Evans and Neel Kashkari.

The fresh inflation print also comes after an unexpected surge in the July labor market report quieted some concerns over a potential recession in the U.S. The strong jobs report bolstered the Fed's argument that its current interest rate path will help keep the world's largest economy from expanding at an unsustainable pace.

The dollar index - which measures the greenback against a basket of other major currencies - was trading down by 0.39% at 105.95 in the wake of the inflation data. Futures for the Dow Jones, S&P 500 and Nasdaq all pointed higher as well.

The yield on the United States 10-Year - a proxy for broader economic and inflation expectations - fell by 0.1% to 2.7%. The United States 2-Year, which is sensitive to short-term rate movements, dropped by 0.17% to 3.12%. Yields tend to move inversely to prices.

U.S. Inflation Slows by More Than Expected in July as Fed Eyes Future Rate Hikes
 

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Comments (32)
Peter O Neill
Peter O Neill Aug 10, 2022 8:02PM ET
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Inflation is only down as energy prices came down over the past few months (plus energy prices impact everything even when not included in direct mix). Only a temporary reprice though. Come Oct / Nov energy prices will climb by 20-30% at least as strategic reserves pulls stop, winter hits and the EU increases its energy sanctions versus Russia (most experts saying could well climb again to $120 - $140). Wouldn't go near the stock market until Nov at earliest even if a moronic bull market does start as can see it all collapse come Nov mid terms with market falling back to pre covid levels by this time next year.
Hussain Ezzo0
Hussain Ezzo0 Aug 10, 2022 4:14PM ET
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TDCHtskYvEBD8yg5nhPQzptmHcXPnDk4oD
Jaime Gomez
Jaime Gomez Aug 10, 2022 2:54PM ET
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US inflation is lower than expected they have the same accountants as China applying Magic now you see it now you don't
First Last
First Last Aug 10, 2022 2:54PM ET
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No, I still see inflation.  It didn't go down that much.
Jaime Gomez
Jaime Gomez Aug 10, 2022 2:54PM ET
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First Last  You see inflation and so everybody, but the objective got accomplished, to prop the markets. Make belave that's what the magicians do.
tim banks
tim banks Aug 10, 2022 2:54PM ET
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tell me where gas is more expensive than a month ago. no where
Parveen Tiwari
Parveen Tiwari Aug 10, 2022 9:41AM ET
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The FED should always hike double that of opinion poll or expectations As most speculators overplay commodities and they need to be thwarted heavy and it does not matter if they get bankrupt in the process of inflating prices, crude specifically. The common man the unemployed and reirees needs to breathe not allow vested interest take over the economy
First Last
First Last Aug 10, 2022 9:41AM ET
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That wouldn't work..  Expectations would adjust up if the Fed did that.
Hungry Fish
Hungry Fish Aug 10, 2022 9:41AM ET
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Party time!
Alpha Omega
Alpha Omega Aug 10, 2022 9:28AM ET
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The next big NEWS to talk about debt delinquencies. GL.
Victoria vozneac
Victoria vozneac Aug 10, 2022 9:27AM ET
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fine
Marco cuevas
Marco cuevas Aug 10, 2022 9:27AM ET
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Classic bear market rally pump today pump Thursday dump on Friday...go ahead buy today so you can lose momey.
Black Bear
BlackBear Aug 10, 2022 9:27AM ET
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Unless we'd get another round of insanity to ATHs. Wouldn't be surprised.
TWIN ZONE
TWIN ZONE Aug 10, 2022 9:26AM ET
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Wishful thinking at its best!
First Last
First Last Aug 10, 2022 9:26AM ET
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It's not wishing.  It happened.
NEELAKANTAN IYER
NEELAKANTAN IYER Aug 10, 2022 9:17AM ET
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Dow opening more than 300 points. Where are we heading to?
First Last
First Last Aug 10, 2022 9:17AM ET
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Green day
 
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