US headline and core CPI to rise by 0.2% in July

A central expectation of the FOMC is that the deflationary impulse associated with the weak oil price and strong USD will abate, seeing inflation tend to their 2.0% medium-term target. While annual headline inflation continues to be restrained, coming in at just 0.1%yr in June, available information on core inflation pressures are more robust. 

Annual core inflation printed at 1.8%yr in June; and six-month annualised inflation was stronger still at 2.3%yr. Key to this underlying price pressure is rents, with the shelter component of the CPI continuing to grow at a rapid clip - 3.2% in six-month annualised terms in June. Other ex-energy services are also seeing robust price growth. In July, food and energy prices likely had an insignificant impact; headline and core prices are therefore expected to rise 0.2%.