- Core CPI MoM came in exactly as MacroX and consensus expected at +0.2%?
- Crucially, MacroX has also consistently identified an important dynamic that would drive the disinflation we’ve seen over the last 4 months - lower wage growth from declining bargaining power or workers vs. employers that our unique measures first identified at the beginning of March
- Deflation in Goods was partially mitigated by Services CPI increasing +0.3%. However, much of this strength in Services was driven by a jump in CPI Shelter which rose +0.37% in July (from +0.17% in June). We expect this to decelerate in the coming months in line with alternative data measures of rental inflation. This should also continue to moderate Services CPI
- This ensures the Fed will cut rates next month - we think 25bps is more likely than 50bps given the strength of the underlying economy but much will depend on next month’s jobs report
- MacroX is closely watching our nowcasts for any sign of economic weakness. Thus far in Aug, none are signaling anything other than an economy that is softly landing
