Advertisement
Advertisement
Advertisement
Avatrade
Advertisement
24Option
XM.com - Trade Forex with up to 1:500 Leverage and up to $5000 Bonus.
FXRank technical section offers a profound and in-depth text and video Forex and Commodities technical analysis reports done by professional analysts with a great understanding of the market
Advertisement

CPI: Core Inflation Rebounds, But Fed Still Concerned

Written by By Stuart Cowell | 2019-07-11 14:16:00 GMT

CPI rose 0.1%, driven by a 0.3% jump in core prices. The core's gain makes up for some exaggerated weakness in recent months. Inflation is getting back on track to meet the Fed's target, but not fast enough.

Core Inflation Leaps in June

Overall inflation remained tame in June. The Consumer Price Index increased just 0.1% for a second straight month, sending the year-over-year rate down to 1.6%.

Energy prices were a drag on the headline as gasoline prices posted an unusually steep decline for this time of year. Food inflation also eased up, at least at the grocery store, with prices for food at home falling 0.2%. The cost of eating out, however, picked up in June and continues to gradually strengthen on trend. Over the past year, prices for food away from home are up 3.1%, which matches this cycle's top rate (top chart).

fxsoriginal

 

After a string of subdued readings, core inflation bolted back in June. Prices for goods and services rose 0.3% (0.29% before rounding), ending a four-month run of 0.1% gains. The increase reflects payback for undue softness in recent months, rather than the start of a sharp pickup in the trend. For example, apparel prices jumped 1.1% after falling 2.8% between March and May following the introduction of a new collection procedure for a major department store. Used vehicle prices jumped 1.6% after declining more than 1% in each of the past two months, despite a turnaround in auction prices according to other sources.

Elsewhere, gains in core inflation looked more in line with recent trends. Core services prices rose 0.3% on the back of continued strength in shelter inflation (middle chart). Low vacancies in the apartment market and new construction skewed toward high-end units have pushed rental prices up nearly 4% over the past year, while owner-occupied housing costs have risen 3.4%. Medical care inflation has also picked up in recent months, while transport services inflation, including airfare, has been more subdued.

fxsoriginal

 

Fed Losing Patience on Inflation

Today's report is consistent with inflation climbing back toward the FOMC's target in the coming months (bottom chart). But Fed officials are increasingly concerned about the generalized weakness in inflation that has persisted this expansion. Although it is starting to get back on track, Fed officials have grown impatient over the time it is taking inflation to return to target on a sustained basis. Declining inflation expectations suggest a more arduous road ahead in getting there. Consumers' long-term inflation expectations are at a historic low, while market-based measures have moved lower over the past year. The minutes of the June FOMC meeting released yesterday showed "many" officials thought inflation expectations might already be below levels consistent with the Fed's goal, with "a few" thinking that warranted more policy support in the "near term." We continue to look for the FOMC to cut the fed funds rate 25 bps at its meeting later this month, in no small part due to the cumulative weakness in inflation.

fxsoriginal

 

 

Download The Full Economic Indicators

Author

By Stuart Cowell
FXTM

Start Trading With Top Industry Brokers

Broker Profile Open Account
XM
  • Minimum Deposit: 5 USD
  • Leverage of up to 1:30
  • Leverage applies to all EU regulated entities of the group. Leverage depends on the financial instrument traded.
  • Broker Type : Market Maker
  • Regulation : CySEC,ASIC, FCA
  • XM
    FBS
  • Offer: 50USD No Deposit Bonus
  • Offer: 100% Deposit Bonus
  • Minimum Deposit: 1 USD
  • Leverage of up to 1:500
  • Broker Type : Market Maker
  • Regulation : CRFIN (Russia), 009069697 IFSC (Belize), IFSC/60/230/TS/12
  • FBS
    Tickmill
  • Offer: 30USD No Deposit Bonus
  • Minimum Deposit: 25 USD
  • Leverage of up to 1:500
  • Broker Type : ECN/STP & STP
  • Regulation : FSA SD008
  • Tickmill

    The Best Crypto to Crypto

    Exchanger Advantages Open Account
    binance
  • Safety Stability: Multi-tier & multi-cluster system architecture
  • Binance charges a quite low commission fee
  • Multiple-Coin Support : BTC, ETH, LTC, BNB...
  • High Liquidity
  • Multiple-Language Support
  • binance
    changelly
  • Instant cryptocurrency exchange
  • More than 500,000 satisfied users
  • Changelly charges a quite low commission fee
  • Safety Stability
  • changelly
    bitmex
  • Bitmex - Bitcoin Mercantile Exchange is a cryptocurrency derivatives trading platform.
  • Bitmex charges a quite low commission fee
  • Safety Stability
  • changelly

    Best Brokers to Trade Crypto

    Broker Profile Open Account
    XM
  • Minimum Deposit: 5 USD
  • Leverage of up to 1:30
  • Leverage applies to all EU regulated entities of the group. Leverage depends on the financial instrument traded.
  • Broker Type : Market Maker
  • Regulation : CySEC,ASIC ,FCA
  • XM
    FBS
  • Offer: 50USD No Deposit Bonus
  • Offer: 100% Deposit Bonus
  • Minimum Deposit: 1 USD
  • Leverage of up to 1:500
  • Broker Type : Market Maker
  • Regulation : CRFIN (Russia), 009069697 IFSC (Belize), IFSC/60/230/TS/12
  • FBS
    HotForex
  • Offer: 100% Deposit Bonus
  • Minimum Deposit: 50 USD
  • Leverage of up to 1:500
  • Broker Type : STP
  • Regulation : CySEC, 183/12 FSC (Mauritius), 094286
  • HotForex

    Contact us
    fxrank.net@gmail.com