CPI, June and Inflation
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Some economists think inflation will hit 3.5% in this morning’s report, coming in above the Bank of England’s forecast. We look at what to expect.
While pundits looked with their magnifying glasses for tariffs in consumer goods prices, it was in services, which are not tariffed, where inflation took off again.
UK inflation unexpectedly rose to its highest level since January 2024 as food prices jumped, keeping some pressure on the Bank of England as it looks to continue dialing down interest rates.
Services inflation, especially rent and shelter inflation, continued to decline, offsetting rising core goods inflation that may be influenced by tariffs, Steve Hou, a quant researcher at Bloomberg, said in a Tuesday post on X.
Both the S&P 500 (.SPX) and Nasdaq (.IXIC) - and by extension, MSCI's world equities index (.MIWD00000PUS) - retreated from record peaks after traders shaved back bets of U.S. rate cuts this year as prices rose for things such as coffee and couches, while staying steady for tariff-exempted (for now) items such as cars.
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Tech led US stocks on Tuesday as a key consumer inflation print showed inflation accelerated in June, big banks kicked off earnings season, and Nvidia was set to receive a green light for trade with China from the Trump administration.
Consumer prices posted the biggest increase in June in five months and are likely to keep the Federal Reserve from cutting interest rates soon, but there only scattered signs of tariff-related inflation.
Stocks dipped on Tuesday as new consumer price index data showed rising inflation and the Aug. 1 deadline for Trump’s tariff campaign loomed.
June’s U.S. CPI print showed that there is evidence of inflation pressures in the product categories that are most exposed to tariffs, said Parker Ross, global chief economist at Arch Capital Group. Household furnishings and supplies saw prices jump by 0.