US: CPI likely increased to 1.7% y/y in July – Danske Bank

In the US, CPI and CPI core for July are released today and analysts at Danske Bank expect both figures likely increased to 1.7% y/y in July.

Key Quotes

“Both inflation measures have been declining rapidly since February and are currently far below the Fed's 2% target and there is no immediate compelling argument for a drastic uptick. Although the Fed continues to believe the tighter labour market will eventually drive inflation up and the US dollar has recently depreciated sharply, these are both effects that take a long time to work their way into the CPI numbers. Thus, we believe inflation will continue to hover around 0.1% m/m (both headline and core), implying both figures increased to 1.7% y/y in July (in June, headline CPI read 1.6% y/y, while CPI core was 1.7%).”

“Further, Federal Reserve Bank of Minneapolis President Kashkari (voter, dovish) and Federal Reserve Bank of Dallas President Kaplan (voter, dovish) both speak today.”

“Germany, France, Spain and Italy all release their final HICP figures today.”