The closely watched U.S. inflation report showed that consumer price growth was in line with expectations in July, according to the latest data released by the Bureau of Labor Statistics on Wednesday morning.
The Consumer Price Index (CPI) rose 0.2% from the previous month, up from a 0.1% decline in June on the back of rising energy prices. The monthly inflation rate was in line with economists’ expectations.
The index rose 2.9% year-on-year in July, a slight slowdown from June’s 3.0% year-on-year increase and above economists’ expectations of a 3.0% increase.
On a “core” basis, which excludes volatile costs like food and gasoline, prices rose 0.2% in July from the previous month and 3.2% from a year earlier, in line with economists’ expectations. Core prices rose 0.1% in June from the previous month and 3.3% from a year earlier.
The next update on consumer price inflation is scheduled for Wednesday morning. (AP Photo/David Zalubowski, File) (The Associated Press)
Inflation is running above the Federal Reserve’s 2% annual target, but recent economic data, including the July jobs report that sparked the sell-off, are fueling the view that the central bank should cut interest rates sooner rather than later.
Notably, the Fed’s preferred inflation measure, the so-called core PCE price index, showed inflation was unchanged in June from the previous month, and that the annual rate of increase in core PCE was the slowest in more than three years.
Immediately following the release of the inflation data on Wednesday, the market was pricing in a nearly 100% chance that the Fed would cut interest rates by the end of its September meeting. But traders’ predicted odds of a 50 basis point cut and a 25 basis point cut last week were 70/30, but are now split at nearly 50/50, according to the CME FedWatch tool.
Alexandra Canal is a senior reporter at Yahoo Finance. Follow her at Yahoo Finance. Translatorvisit me on LinkedIn or email me at alexandra.canal@yahoofinance.com.
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