A widespread inflation measure accelerated somewhat less than expected annually than the tariffs of President Donald Trump mostly showed modest effects and investors received more confidence in the upcoming interest rates.
The consumer price index increased seasonally by 0.2% for the month and 2.7% to 12 months, as the Bureau of Labor Statistics reported on Tuesday. Compared to the respective Dow Jones estimates for 0.2% and 2.8%.
Without food and energy, the core CPI rose 0.3% per month and 3.1% compared to the previous year compared to the forecasts for 0.3% and 3%. The Federal Reserve officials generally consider the core inflation as a better reading for long -term trends. The monthly core rate was the largest increase since January, while the annual rate has been the highest since February.
An increase in protection costs by 0.2% caused a large part of the index increase, while food prices were flat and energy declined by 1.1%, the BLS said. Tariff -sensitive new vehicle prices also remained unchanged, although used cars and trucks a jump of 0.5%. Transport and medical care. Both recorded 0.8% higher.
According to the report, the stock markets made strong profits, although the yields of the Ministry of Finance were mixed. The dealers increased the bets that the Federal Reserve would reduce interest rates again in September.
The tariffs seemed to appear in several categories.
For example, household furniture and supplies showed 0.7% in June after the increase of 1%. However, clothing prices only rose by 0.1% and the core of raw material prices rose only by 0.2%. Fruit and vegetables in canned goods, which are usually imported and are also sensitive to tariffs, were flat.
“The tariffs are in number, but they certainly don't jump on fire at that time,” the former economist of the White House, Jared Bernstein, told CNBC. Bernstein was under the former President Joe Biden.
The report comes both at a critical time for the economy and for the BLS itself, which is a political bias against him. Trump dismissed the former BLS commissioner after a surprisingly weak July -wage and salary billing report in July at the beginning of this month and said on Monday that he would nominate EJ Antoni, a critic of the office, as a new boss.
The office was hindered by budget and personnel cuts and has stopped data acquisition in several cities. Together with that, the data had to be values in a number of goods and services they have persecuted, which led to questions about accuracy and credibility.
While political jockeying has occurred, the FED officers have closely observed the inflation measures because they weigh their next interest decision in September.
“Inflation is increasing, but it did not increase as much as some people feared,” said Ellen Zentner, chief management strategist at Morgan Stanley Wealth Management. “In the short term, the markets will probably accept these figures, as they should enable the Fed to concentrate on the weakness of the labor market and to keep a September rate on the table. In the long term, we probably did not see the end of rising prices because the tariffs continue to work through the economy.”
It is about whether the tariffs cause a one -time price increase or lead to a permanent increase in inflation. Economists see the tariff effects in general, since the former, albeit the broad group of objects that are covered under Trump's decree, have triggered concerns that the effect could take longer.
The pricing for the futures market shows strongly on a Fed rate reduction in September. A number of data between now and then, however, could influence both the decision for this meeting and the future course of the central bank. Fed civil servants recently have expressed increasing concerns about the labor market, which would contribute to the reduction in installments.
Dealers increased the implicit opportunities for a September change after the publication and, according to the Fedwatch tool of the CME group, provided the chances of a further reduction in October at around 67% compared to 55% the day before.
The CPI is not the primary inflation forecast tool of the Fed. The central bank uses the price index of the personal consumption of the trade department, but the CPI and the producer price index, which is to be published on Thursday, leads to this calculation.
In the an average of an average hourly income adjusted in inflation, only 0.1%rose per month, the BLS said in a separate publication. The annual profit thus made 1.2%.
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