Breaking News: US core CPI rises by 2.9% Y/Y in June vs 3.0% expected

• US Consumer Price Index (CPI) ex. Food & Energy June (Core) (YoY): +2.9% vs +3.0% expected, miss of -0.1%
• US Consumer Price Index (CPI) ex. Food & Energy June (Core) (MoM): +0.2% vs +0.3% expected, miss of -0.1%
• US Consumer Price Index (CPI) June (YoY): +2.7% vs +2.7% expected, meets consensus
• US Consumer Price Index (CPI) June (MoM): +0.3% vs +0.3% expected, meets consensus

Breaking: US core CPI rises by 2.9% YoY in June, up 0.2% MoM. The report falls short of expectations, with markets predicting a higher rate of 3.0% YoY, and a monthly gain of +0.3%.

Key takeaway: Although US core inflation is rising more slowly than expected, CPI has risen 0.1% year-over-year. While inflation has risen below expectations for a fifth straight month, the Fed may use the uptick in inflation data as justification for maintaining its current ‘wait-and-see’ approach.

Otherwise, markets are yet to see any significant inflationary impact from trade tariffs.

"The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent on a seasonally adjusted basis in June, after rising 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.7 percent before seasonal adjustment"

Consumer Price Index (CPI) June, U.S. Bureau of Labor Statistics

In the minutes following the release, EUR/USD rose by 0.22%, while the Dow Jones (DJIA) futures fell 0.08% ahead of the NYSE open. Gold (XAU/USD) also trades lower, down -0.15%.

If nothing else, today’s inflation report continues to mount pressure on the Federal Reserve, which, by all accounts, will now find it even harder to justify leaving rates unchanged.

Amid falling inflationary pressures and an otherwise sturdy labor market, today’s release shows MoM inflation rising lower than expected for the fifth consecutive month, and importantly, is yet to show any significant inflationary impact courtesy of trade tariffs.

With the potential inflationary impact of trade tariffs at least part of the justification for maintaining rates at ~4.50% in June, today’s report will come as welcome news to President Trump, who has previously made his demand for lower rates crystal clear

The only fly in the ointment, however, is that YoY inflation did rise in today’s report to 2.9%, up 0.1% from May. Representing the first yearly increase since January, the Federal Reserve may use today’s CPI uptick to maintain its commitment to the current ‘wait-and-see’ approach.

This goes double considering that PCE, the Fed’s ‘preferred’ measure of inflation, will fall on July 31st, crucially, the day after the Fed’s next interest rate decision. Separately from PPI tomorrow, today’s release offers one of the last snapshots of current US inflation ahead of the upcoming Fed decision of July 30th.

Read more on today’s CPI report: The US Dollar cannot find a direction despite the positive CPI report