Annualized inflation rose to 3.2% last month

Aug. 10:

The July Consumer Price Index report is a good reminder that economic data rarely moves in a straight line. The index rose 0.2%, bringing the annual inflation rate up to 3.2% from 3.0% in June.

Core CPI, which excludes volatile food and energy costs, also rose 0.2% in July, matching the increase seen in June. It’s the lowest monthly growth rate since August 2021. Year over year, core CPI dropped slightly from 4.8% to 4.7%. That decline is viewed favorably as the core CPI may give us a better view of inflation trends. 

The cost of shelter remains the most significant factor contributing to inflation. Shelter prices were up 0.4% in July and up 7.7% year over year. There will be another CPI report on Sept. 13, one week before the next Federal Open Market Committee meeting.

New unemployment claims jumped to 248,000

Weekly initial jobless claims rose to 248,000 last week from 227,000 the week prior. The four-week moving average is now 231,000.

State of the market

The Dow traded up this morning. After some initial gyrations after the CPI report was released, the market settled a bit with very little change in Treasury yields relative to yesterday morning.

Economic calendar

Friday, Aug. 11

• Producer Price Index
• University of Michigan Consumer Sentiment

Treasury calendar

Wednesday, Aug. 9

• Yesterday’s $38 billion auction of 10-year Treasury notes resulted in a yield of 3.999%, with demand higher than at the previous such auction.

Thursday, Aug. 10

• $23 billion auction of 30-year Treasury bonds

By Mike Kraft, Executive Director and Commercial Real Estate Treasurer for Commercial Banking