US consumer inflation slowed in July

Members of the Fed will see the release of the Consumer Price Index report for August, due September 16, on the morning of the start of their next monetary policy meeting.

The consumer-price index, which reflects what Americans pay for everything from razors to rent, rose a seasonally adjusted 0.1% in July from a month earlier, the Labor Department said Wednesday.

Economists surveyed by The Wall Street Journal expected both measures to increase 0.2% last month.

Housing continues to rise Inflation in consumer prices rose to 3.5% year-on-year (y/y) in June, though there were indications that pressures have eased in the last three months.

On a monthly basis, the CPI for July increased 0.8 per cent. The department said of the twelve major groups of goods and services, nine recorded an increase, one registered a decline, while two remained unchanged.

Compared to last year, economists are looking for a 0.2% gain from June, and 1.8% excluding food and energy.

The rate of inflation in the UK rose to 0.1% in July, according to the Office of National Statistics (ONS). Over Jan-Jul the CPI grew by 3.7% year-on-year.

These factors have been holding inflation down amid a plunge in the world oil price and a supermarket price war as major grocers vie to fend off the threat of discounters Aldi and Lidl. When combined with a stronger dollar and slower growth overseas, the energy slump will make the Fed’s 2 percent inflation target even more elusive. “Fundamentally, the inflation outlook is still too weak to merit raising interest rates this year”. Apparel prices (about 3% of CPI) were up by.3% but remain down y/o/y.

Analysts believe the figure could still return to negative territory in the coming months as the fall in the price of oil works its way through the statistical system.

Schroders senior European economist Azad Zangana says the latest CPI figures “show signs of a healthy economy that is enjoying the dividends from lower global commodity prices”. But applications to purchase homes fell 1%. The benchmark 10-year jumped to 2.207% before slipping back to 2.196% by 8:55 a.m.ET.