July CPI report is out. Overall CPI MoM rose 0.2% in July vs. 0.2% in June while the core CPI MoM rose 0.2% in July vs. 0.2% in June. Overall CPI YoY rose 3.2% in July vs. 3% in June, 4.0% in May, 4.9% in April and 5% in March. Core CPI YoY rose 4.7% in July vs. 4.8% in June, 5.3% in May, 5.5% in April and 5.6% in March. The Core CPI is finally coming down with two 0.2% MoM increases from 6 months of 0.4% - 0.5% MoM increases.
As mentioned inmy post earlier this week, the plunge of exports from China is set to affect prices of goods around the globe. The apparel price index is flat in July and is likely to become negative in the coming months. In a way, the slowdown of China's economy and thesoftening of RMB helps relieve the inflation pressure in the USA. With the core CPI coming down and imports getting cheaper plus the student loan payment restart, chances are the inflation pressure will come down dramatically. I don’t know if the Fed will start cutting rates anytime soon but I suppose they won’t raise rates further from here.