#CPIReport #InflationTrends #EconomicImpact
The eagerly awaited June CPI inflation report is set to be released on Thursday, and economists are predicting a 0.1% monthly increase and a 3.1% yearly increase. This report follows Federal Reserve Chair Jerome Powell's testimony on Capitol Hill, where he indicated that the Fed views the risks to the economy as balanced between inflation and recession. Powell also stated that waiting for inflation to reach the 2% mark before cutting rates is unnecessary.
The economic data suggests a slowdown in inflation and economic expansion, with a recent report revealing a slight increase in unemployment to 4.1% in June. The core CPI, excluding food and energy, is expected to rise by 2% from last year and 34% since last year. In May, the CPI remained steady on a monthly basis and rose by 3.3% annually.
Analyzing the trends in unemployment and inflation could support the argument for rate cuts. While inflation remains above the Fed's 2% target, unemployment is historically low at 4.1%. However, both indicators are showing a shift, with unemployment gradually rising and inflation decreasing.
Price fluctuations in the components of the CPI index will be closely monitored, particularly if the results differ from expectations. Areas such as shelter and medical care services could be critical, as highlighted by Tony Roth, chief investment officer at Wilmington Trust. Medical services and shelter are significant components of the personal consumption expenditure index, which the Fed favors over CPI for measuring inflation.
Market expectations indicate that the Fed will maintain rates at its upcoming meeting and potentially cut them in September. The anticipated status quo in July might limit the immediate impact of Thursday's CPI report on the market. However, Roth from Wilmington Trust suggested that stocks could see a boost if the inflation data is lower than expected, as some investors are still wary following earlier concerns about rising inflation.
Original Article: https://www.cnbc.com/2024/07/10/june-cpi-inflation-report-preview.html
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