Today’s data revealed that US CPI rose 0.2% in July. Analysts at Wells Fargo point out that core inflation is up 2.4% over the past year and should keep the Federal Reserve on track to raise rates two more times during 2018.
“Consumer price inflation picked up a bit in July, with the CPI rising 0.2 percent after advancing 0.1 percent in June. That kept the 12-month change in inflation at 2.9 percent, the fastest rate in six years. Energy has been a key driver of the increase in inflation over the past year, but over the past two months prices have headed in the other direction.”
“Outside of energy and food, prices continued their steady ascent. Core inflation increased a “strong” 0.2 percent (0.24 percent before rounding). Services continue to lead the way, with prices rising 0.3 percent.”
“The rise in inflation over the past year has sent real wages back into negative territory and is one reason we do not expect real consumer spending to maintain the breakneck pace of the second quarter. Real earnings should improve ahead, however.”
“While headline inflation should ease in the coming months amid a pullback in oil prices, core inflation will likely remain near its current 12-month rate of 2.4 percent.”
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