Core Consumer Prices Hit New Record High – Up For 50th Straight Month

Following last month’s ‘deflationary’ print (-0.1% MoM), analysts expected headline CPI to rise 0.2% MoM and they were spot on, shifting the YoY CPI print to 2.9% (from 3.0%) – the lowest since March 2021…

Source: Bloomberg

Goods deflation continues to drag overall CPI lower…

Source: Bloomberg

For context, Goods prices are down 1.9% YoY – the biggest deflationary impulse since 2004. Services prices continue to rise YoY but at the slowest pace since 2022…

Source: Bloomberg

The 3m and 6m annualized CPI rates continue to trend lower (with Energy a particularly volatile factor)….

Source: Bloomberg

Core CPI also rose 0.2% MoM (as expected), and the YoY rate of inflation slowed to 3.2% (from 3.3%) – the lowest since April 2021…

Source: Bloomberg

While Core CPI is slowing YoY, the Core goods deflation appears to have stalled…

Source: Bloomberg

However, that is the 50th straight month of MoM increases in Core CPI, and a record high…

Source: Bloomberg

Under the hood, used car prices fell 2.3% along with airline fares (-1.2%) while Car insurance costs jumped 1.2% and furniture prices rose 0.3%…

Source: Bloomberg

Perhaps more worrying is the fact that rent inflation has stopped falling…

• July Shelter inflation up 0.33% MoM and up 5.05% YoY vs 5.16% in June

• July Rent Inflation up 0.42% MoM and up 5.09% YoY vs 5.07% in June

Source: Bloomberg

Finally, the so-called SuperCore CPI rose 0.2% MoM (same as the rest), dragging the YoY down to 4.73% (still notably elevated)…

Source: Bloomberg

Transportation Services jumped notably MoM..

Source: Bloomberg

So, is this ‘good’ news or bad news?

Finally, money supply growth is reaccelerating…

Source: Bloomberg

Is this the trough for CPI?

As Bloomberg notes, while the pace of inflation has come down, its still growing, and consumers in the New York-Newark-Jersey City, NY-NJ-PA metro, and the Dallas area still are dealing with inflation in excess of 4% — the highest among large metro areas in the US.

Will The Fed really cut rates as rent inflation inflects higher for the first time since 2023?