Investing.com - As per the latest predictions, the imminent monthly report on US consumer prices is likely to reflect a consistent alignment with the Federal Reserve's annual target of 2% core inflation for two consecutive readings. This forecast comes from Bloomberg Economics' analysis.
Market analysts are expecting a monthly rise of 0.2%. This follows closely behind June's equivalent increase as projected by economists Anna Wong, Stuart Paul, and Jonathan Church in their preliminary review of the report.
According to these experts, July’s CPI report will indicate an incoming wave of disinflation impacting the American economy. They attribute this potential decrease in core CPI largely to a worsening economic environment where previous Federal rate hikes may have affected demand within sectors sensitive to interest rates.
This week’s Bureau of Labor Statistics release holds significant influence over future discussions surrounding Fed policies. Market watchers no longer anticipate further hikes in interest rates by the central bank following July’s benchmark surge - its peak in over two decades. Moreover, subdued inflation figures could potentially support this outlook further.
Fed officials are paying particular attention to core inflation trends. The moderating rent increases coupled with falling prices for both used and new vehicles are expected factors contributing towards July’s statistics as suggested by Bloomberg economists.
Highlighting their expectations from upcoming reports:
- Headline CPI might have seen an increase of about 0.3% while core CPI possibly rose around 0.2%
- Core goods prices may have dipped around 0.3%, partly due to decreases in used-car prices (1.6%) and new vehicle costs (0.5%)
- Primary rents probably experienced an uptick at approximately 0.4%, slightly less than June's reported growth
However, despite these forecasts suggesting against additional tightening measures by the Fed soon; August numbers set for release next month might present less favorable conditions according to Bloomberg economists.
Nonetheless, they anticipate rising oil and gasoline costs driving up headline CPI specifically but predict policymakers will remain focused on managing moderation within core areas as overall economic growth slows.