U.S. July CPI up 2.7%...Below Expectations

JOON HYOUNG LEE

Summary

It was announced that the U.S. July CPI growth rate was 2.7%, falling short of the market expectation (2.8%).
Excluding volatile items, the core CPI increased by 3.1%, slightly exceeding expert forecasts (3.0%).
The market is paying attention to the possibility that inventory depletion by companies and tariff hikes will be fully reflected in consumer prices.

The U.S. Consumer Price Index (CPI) growth rate for July fell short of market expectations.

The U.S. Department of Labor announced on the 12th (local time) that last month's CPI rose 2.7% year-over-year. This figure is 0.1 percentage point lower than the market forecast (2.8%). Compared to June (2.7%), the rate of increase remained the same.

On a month-over-month basis, it rose 0.2%. This matches expert predictions (0.2%), and is 0.1 percentage point lower than the previous month's (June) rise of 0.3%.

Excluding the more volatile food and energy categories, the core CPI was up 3.1% from a year earlier. This figure is 0.1 percentage point higher than expert forecasts (3.0%). Compared to the previous month (June, 2.9%), the rate of increase expanded by 0.2 percentage points.

Since core CPI reflects the underlying trend of inflation, it is closely watched by both the U.S. monetary authorities and Wall Street. The market has been paying close attention to this CPI release, as it is believed that the effects of tariffs are now being fully reflected in prices.

Market analysts believe that companies have so far managed to absorb tariff burdens by securing inventory in advance. However, from this summer, with these inventories being depleted, there is a strong possibility that the increased tariffs will be passed on to consumer prices. Jerome Powell, Chair of the Fed, and other monetary authorities have consistently warned of the possibility of higher inflation this summer.

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