Latest US Inflation Figures Give Fed Officials Breathing Room
- Headline and core CPI both match expectations - Shelter drives much of July’s monthly increase - Core goods rebound after June’s promotional weakness - Softer inflation keeps September hold firmly in play
Inflation data from the Bureau of Labor Statistics appeared to offer some solace for the doves on the FOMC.
Headline CPI rose an in-line 0.1% m/m in July, rebounding from the 0.4% decline seen last month. On the year, the index slipped a tenth to 3.4%, also matching estimates. Core CPI increased 0.2% m/m, following a flat June reading, while the annual rate eased to 2.5% from 2.6%. Both figures were in line with forecasts.
The BLS said shelter costs rose 0.1% in July, accounting for roughly two-thirds of the overall monthly increase. Food prices increased by the same amount, with food away from home up 0.3%. Partially offsetting those gains, the energy index fell 1.5%, led by lower gasoline prices.
Assessing the report, Barclays’ Pooja Sriram said the data were likely comforting enough for centrists on the FOMC to keep policy rates steady, shifting the focus instead to next month’s labour market and inflation reports.
“The rebound in July CPI restores the state of play we had pencilled in before June's downside surprise and points to reasonably contained inflation pressures,” the economist said.
Source: BLS
Breaking Down Goods and Services
Within the core measure, the BLS reported increases in medical care, airline fares, communication, education and recreation. Motor vehicle insurance was among the major components to decline.
Core goods rose 0.2% m/m in what analysts described as a “broad-based rebound.” Barclays’ Sriram said: “There seems to have been a pull-forward in promotional sales for apparel and other goods categories in June that likely depressed prices that month and led to an unseasonal increase in July.”
Core services rose 0.2% m/m following a flat June reading. As noted, shelter was a major contributor to both the services component and the overall increase in CPI.
The super-core measure — core services excluding shelter — rose 0.189% m/m, reversing a 0.206% decline in June. On the year, it was estimated to have slowed to 2.843% from 3.172%.
Goldilocks Scenario
“This is the type of inflation report the market was hoping for,” wrote Nationwide Financial Market Economist Oren Klachkin. “It keeps the disinflation trend intact and so should lower the volume of the alarm bells at the Fed and allow policymakers to keep interest rates steady in September – contingent on the August CPI and employment reports.”
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- Headline and core CPI both match expectations
- Shelter drives much of July’s monthly increase
- Core goods rebound after June’s promotional weakness
- Softer inflation keeps September hold firmly in play
By Harry Daniels
LiveSquawk News
@HarryDaniels71
16:00 GMT | 12 August 2026
Inflation data from the Bureau of Labor Statistics appeared to offer some solace for the doves on the FOMC.
Headline CPI rose an in-line 0.1% m/m in July, rebounding from the 0.4% decline seen last month. On the year, the index slipped a tenth to 3.4%, also matching estimates. Core CPI increased 0.2% m/m, following a flat June reading, while the annual rate eased to 2.5% from 2.6%. Both figures were in line with forecasts.
The BLS said shelter costs rose 0.1% in July, accounting for roughly two-thirds of the overall monthly increase. Food prices increased by the same amount, with food away from home up 0.3%. Partially offsetting those gains, the energy index fell 1.5%, led by lower gasoline prices.
Assessing the report, Barclays’ Pooja Sriram said the data were likely comforting enough for centrists on the FOMC to keep policy rates steady, shifting the focus instead to next month’s labour market and inflation reports.
“The rebound in July CPI restores the state of play we had pencilled in before June's downside surprise and points to reasonably contained inflation pressures,” the economist said.
Within the core measure, the BLS reported increases in medical care, airline fares, communication, education and recreation. Motor vehicle insurance was among the major components to decline.
Core goods rose 0.2% m/m in what analysts described as a “broad-based rebound.” Barclays’ Sriram said: “There seems to have been a pull-forward in promotional sales for apparel and other goods categories in June that likely depressed prices that month and led to an unseasonal increase in July.”
Core services rose 0.2% m/m following a flat June reading. As noted, shelter was a major contributor to both the services component and the overall increase in CPI.
The super-core measure — core services excluding shelter — rose 0.189% m/m, reversing a 0.206% decline in June. On the year, it was estimated to have slowed to 2.843% from 3.172%.
“This is the type of inflation report the market was hoping for,” wrote Nationwide Financial Market Economist Oren Klachkin. “It keeps the disinflation trend intact and so should lower the volume of the alarm bells at the Fed and allow policymakers to keep interest rates steady in September – contingent on the August CPI and employment reports.”