The US Labor Department released July CPI figures that were largely in line with expectations. Airfares dropped the largest amount since 1995 and that was the driver behind the headline CPI figure rising 0.1% instead of the consensus 0.2%. The year to date figure was 0.2%, up marginally on the 0.1% comparable figure from June. Core inflation, which strips out the more volatile food and energy component, came in at 1.8% for the last 12 months, the same as June’s figure and in line with market expectations. US 10y bond yields fell to 2.13% on the back of the results but as it occurred at the same time as Chinese share market volatility there was potentially a “flight to safety” aspect to the bond market move. ANZ said lower oil prices and the stronger USD has broadly offset the effects of a reduction in spare capacity in the US economy.
Read more about inflation and why it is important to investors.
