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Baidu Finance takes you to see the analysis of inflation trends; the US CPI fell sharply to 8.5% in July!

发布时间：2022-08-25 浏览：127

On the evening of August 10, Beijing time, data released by the U.S. Department of Labor showed that the U.S. unseasonably adjusted CPI in July increased by 8.5% year-on-year, expected to increase by 8.7%, and the previous value increased by 9.1%; the unseasonably adjusted CPI in July rose by 0% month-on-month, and is expected to rise 0.2%, the previous value rose 1.2%. In the month, the core CPI, excluding energy and food, rose by 5.9% year-on-year, which was better than the market expectation of 6.1% and the same as the previous value. .

 

After the U.S. July CPI data was released, spot gold rose by $10 in a short-term; the three major U.S. stock index futures rose in a straight line, the Nasdaq futures rose more than 2%, the Dow futures rose 1%, and the S&P 500 futures rose 1.5%; Stocks rose before the market, Tesla rose more than 5%, Nvidia, Amazon, and Netflix all rose more than 3%, Microsoft, Alphabet rose 2.6%, and Apple rose 1.8%; the U.S. 2/10-year Treasury yield curve inversion once exceeded 58 basis points.

 

Kathy Bostjancic, chief U.S. economist at Oxford Economics, pointed out to the "Daily Economic News" reporter in an email that although the inflation data in July fell, due to various factors. Continued impact, inflationary pressures remain strong, "Considering continued inflationary pressures and the continued tight labor market leading to a sharp rise in wages, we think a 75 basis point rate hike in September is still more likely."

 

Expectations of a 75bps rate hike have cooled sharply

Bloomberg reported that inflation data reflecting lower energy prices could also ease pressure on the Federal Reserve to continue raising interest rates sharply to keep prices down.

 

Specifically, in July, the overall US energy prices fell 4.6% month-on-month. Gasoline prices fell 7.7% in the month, the largest monthly decline since April 2020, after rising 11.2% in June; the price of utilities fell 3.6% month-on-month, the largest monthly decline since May 2009; air ticket prices It fell 7.8% month-on-month, the largest drop in nearly a year.

 

However, U.S. food prices rose 10.9% in July from a year earlier, the highest level since 1979. In addition, the cost of housing in the United States rose 0.5% month-on-month and 5.7% year-on-year, the highest since 1991. The increase in housing costs reflected a 0.7% month-on-month increase in primary dwelling rents.

 

 

After the July inflation data was released, the futures market's expectations for the rate hike by the Federal Reserve in September cooled sharply. According to CME Group’s “Federal Reserve Watch”, as of press time, the futures market believes that the probability of the Fed raising interest rates by 50 basis points in September has risen to 61.5%, while the probability of raising interest rates by 75 basis points has dropped sharply to 38.5%.

 

 

However, the "Daily Economic News" reporter noted that although the latest data shows that US inflation has slowed down, Fed officials have previously stated that they want to see evidence of continuous cooling in the CPI, especially the core CPI. In addition, before the Fed's next policy meeting on September 20-21 EST, the U.S. Department of Labor will also release inflation data and non-farm payrolls report for August.

 

The Bloomberg report also said that while the drop in gasoline prices is good news for U.S. consumers, their cost of living is still very high and is forcing many to swipe credit cards to overdraft spending. Separate data released last week also showed that while U.S. labor demand remains strong, labor costs have also risen at the same time — as productivity fell, unit labor costs rose 10.8% quarter-on-quarter in the second quarter, the largest year-on-year increase since 1982.

 

Casey Bostjancic, chief U.S. economist at Oxford Economics, said in an email to the "Daily Economic News" reporter, "Although the inflation data in July fell, due to a variety of factors Inflationary pressures remain strong: consumer demand remains resilient, labor markets are very tight, high supply chain pressures persist, and food prices continue to soar.”

 

He further said that the Fed has pledged to "unconditionally" reduce inflation and maintain a strong labor market, which will prompt Fed officials to continue to aggressively raise interest rates. “We expect the Fed to raise rates by another 125 basis points during the year and raise the midpoint of the federal funds rate range to 3.63% at the end of the year. Today’s inflation report could lead the Fed to cut rates to 50 basis points in September. However, Given continued inflationary pressures, and a persistently tight labor market leading to sharp wage gains, we see a 75 basis point rate hike in September as still more likely."

 

Consumer inflation expectations drop significantly

In fact, U.S. consumers' inflation expectations had already declined.

 

On Monday, August 8th, Eastern Time, the New York Fed released a survey showing that consumer expectations for U.S. inflation in the next few years have fallen sharply.

 

Data showed that in July, U.S. consumers' expectations for inflation growth in the next year fell to 6.22% from 6.78% in June, the lowest since February this year and the largest monthly decline in the survey's history.

 

Over the medium term, U.S. consumer expectations for inflation three years from now fell to 3.18% from 3.62% a month ago, the second straight monthly decline and the lowest since April 2021. Over the longer term, consumers surveyed see U.S. inflation at 2.3 percent five years from now, down sharply from 2.8 percent in the survey earlier this year. Among them, the five-year inflation expectations of the New York Fed were recorded at 3.0% in the first three months of this year, but then fell all the way.

 

 

Respondents also expect gasoline prices, which have risen 60% in the past year, to rise 1.5% in the coming year, down 4.2 percentage points from the June survey and the second-largest monthly decline in the survey's history.

 

Overall, the New York Fed survey showed that consumer expectations for inflation three years from now have fluctuated the most over the past few years, especially in recent months. In addition, consumers' expectations for house price growth and spending growth in the coming year continued to fall from recent highs, while their expectations for household income growth improved.

 

In terms of energy, U.S. consumers expect gasoline prices to rise by 1.46% in one year, a sharp drop of 4.2 percentage points compared with last month's statistics, and the second largest decline on record, after April this year by 4.5 percentage points. Food prices rose by 6.66%, down 2.5 percentage points from the previous month, the largest drop ever; the growth rate slowed down significantly; medical expenses rose by 9.2%, lower than the expected 9.5% last month; university education prices rose by 8.43%, the The month's forecast was 8.7%; rents rose 9.91%, compared with the 10.3% expected last month.

 

 

"We certainly have reason to believe that inflation risks are receding," Derek Halpenny, head of global market research at Mitsubishi UFJ Financial Group, said in an email to the "Daily Economic News" reporter. , but the Fed is still extremely unlikely at this stage to admit that the decline in inflation expectations is the result of its previous rate hikes. Over the weekend, San Francisco Fed President Daly and Fed Governor Bowman both said that more policy needs to be done before any policy shift by the Fed. Do more austerity."