Consumer inflation likely to be another scorcher in July, economists say
Inflation in July is expected to be its hottest since the start of the coronavirus pandemic, suggesting that the sharp rise in consumer prices has reached its peak, economists say.
Economists expect to see an increase in the consumer price index of 0.5% for July, or a gain of 5.3% year over year, according to Dow Jones. That compares with a 0.9% jump in June, or 5.4% on a year-over-year basis, the biggest monthly increase since August 2008
Excluding energy and food, economists expect CPI rose by 0.4% last month, compared with the 0.9% increase in core in June. On a year-over-year basis, June’s core CPI of 4.5% was the highest since September 1991.
If the inflation report is hotter than expected, when it is reported Wednesday at 8:30 a.m. ET, it could be a slight negative for stocks and send bond yields higher. Yields move opposite price.
Hot prices hitting a peak
The report is not expected to have much impact on the Federal Reserve or its plans for tapering the $120 billion a month bond-buying program it’s kept in place to support the economy in the pandemic. The central bank has said inflation is temporary, and the market is looking more at employment data to see if the labor market is as strong as it appeared in the July jobs report Friday.
The really hot CPI numbers are likely to be coming to an end, although the Fed’s preferred inflation measure is the inflation component of the personal consumption expenditures data.
“I think the last of the effects of the reopening will be in this month,” Zandi said, noting July could be the hottest month for inflation.
“I think it’s going to be a peak in the year over year, if not July, then it was June,” he said. “We’re there. We’re peaking.”
Reference: CNBC
Read More: https://www.cnbc.com/2021/08/
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