Low US inflation not just drugs and phone plans - Bloomberg

Author: Nick Bovell | Category: News

On several occasions in recent months, Fed Chair Yellen has cited individual components of the consumer price index as the cause of low inflation. That presumption looks increasingly in doubt.

Here's a summary of Bloomberg Intelligence on US inflation.

  • There's  been soft prints since March. Initially dismissed as transitory, citing phone contracts and prescription drugs.
  • core goods prices remain in outright deflation, while core services prices have decelerated to the slowest growth rate in two years. The deceleration in core services has spanned several categories, not just communications.
  • CPI Energy is likely to weigh modestly on the monthly change in the headline, due to a steeper decline in retail gasoline prices in the month.
  • CPI Food is likely to provide a firmer contribution to headline inflation over the medium term. The food inflation trend has been gradually re-accelerating.

Here's a look at the forecasts from Reuters.

Core CPI expected at 0.2% m/m and 1.7% y/y for July.