BREAKING: U.S. Inflation Data is Out – Here is What You Should Know

Probably the most important U.S. inflation indicator, the Consumer Price Index (CPI), just came out.

The headline inflation rate falls to 2.9% in July, lower than expected.

Consumer prices have increased by 0.2% over the past month, reversing the previous month’s 0.1% decline due to a rise in energy prices.

Excluding the more volatile food and gas prices, core inflation in July rose by 3.2% compared to the previous year, a slight decrease from June’s 3.3% annual rise. On a monthly basis, core prices increased by 0.2%, up from a 0.1% rise in June, according to data from Bloomberg.

While July’s inflation data is not quite as low as June, it is in line with prior trend in deflation and should meet the Fed’s benchmark for beginning rate cuts in September.

Core inflation has remained persistently high due to increased costs in housing and essential services like insurance and medical care.

Before Wednesday, the Producer Price Index (PPI) was lower than anticipated for July, shaping investor expectations and strengthening the argument for Federal Reserve rate cuts.

In July, US producer prices, which are a critical indicator of wholesale inflation and often predict future consumer price trends, increased by only 0.1% from the previous month, following a 0.2% rise in June. This growth rate was lower than economists had predicted. Annually, the index rose by 2.2%, slightly exceeding the Federal Reserve’s 2% inflation target.

After the recent stock market crash, which deleted around $2 trillion in a day, investors are eagirly awaiting a rate cut, with some even saying that Fed should have an emergency meeting and immediately cut the rates.

With the latest CPI data, in which we see the inflation eased slightly in July, it seems more and more likely that there will be a rate cut in September.