- In July, both headline and core CPI rose 0.2%, marking the smallest back-to-back gains in core CPI in over two years. While housing costs continue to contribute significantly to overall services inflation as well as overall CPI, used-car prices and airfares decreased.
- The report increases the likelihood of the Federal Reserve keeping rates unchanged at the next meeting on September 19-20. However, one more inflation report is due before the meeting.
- Rising oil prices could cause a spike in August’s headline CPI, though the Federal Reserve may be likely to overlook this due to decreased inflation expectations.
- However, policymakers remain divided on rate hikes, with one group believing past rate hikes have been effective, while another group fears stopping too soon could lead to a resurgence in inflation.