July CPI figures showed headline inflation unchanged at 2.7% yoy, missing expectations for a rise to 2.8% yoy. Core CPI accelerated to 3.1% yoy from 2.9% yoy, topping the 3.0% yoy forecast. The annual energy index dropped -1.6% yoy, offsetting a 2.9% yoy rise in food prices.
Month-on-month, CPI increased 0.2% and core CPI rose 0.3%, both matching consensus. Shelter prices gained 0.2% and was the largest contributor to the monthly increase, while the food index was flat and energy prices declined -1.1%.
The pickup in core pressures may keep the Fed cautious. While markets still expect a September rate cut, the uptick in core CPI could limit the pace of policy easing beyond that meeting.
