The annual rate of US consumer inflation has increased for the seventh consecutive month in July, again driven by higher oil and fuel prices and shelter costs. Consumer price index (CPI) figures released by the Bureau of Labor Statistics indicated seasonally-adjusted consumer prices increased by +0.2%, in line with economists’ expectations and the same as June’s +0.2%. However, on a 12-month basis, the consumer inflation rate increased from June’s 2.8% to 2.9%.
“Core” inflation, a measure of inflation which strips out the volatile food and energy components of the index, increased on a seasonally-adjusted basis by +0.2% for the month, while the annual rate increased from 2.2% to 2.3%. This is the highest annual rate of underlying consumer inflation since September 2008.
The reaction to the inflation figures was mixed up with concern arising from gyrations in the Turkish currency and a preference by global investors for low-risk assets such as bonds in “safe-haven” countries. 2 year and 10 year bond yields both decreased by 5bps to 2.60% and 2.87% respectively while 30 year yields fell by 4bps to 3.03%. The USD was stronger against the euro and pound but weaker against the yen.