USA consumer prices see modest rise in July

Bloomberg News

Bloomberg News

US stock markets were set to trade lower as the price report was released early Thursday, with the Dow Jones Industrial Average and the S&P 500 index on pace to drop for the third session in a row. A more sustained ebb in price pressures could make it tougher for the central bank to stay on course for one more interest-rate increase this year.

The Labor Department said Friday that its consumer price index edged up 0.1 per cent last month after no gain in June and a 0.1 per cent fall in May. That lifted the year-on-year increase in the CPI to 1.7 percent from 1.6 percent in June.

Both headline and core CPI rose 0.1% in July, half of what was anticipated for each.

Prices of USA government debt rose after Friday's data while the dollar .DXY fell against a basket of currencies.

Inflation has been low throughout this recovery.

US job markets have maintained solid growth since the recovery from the Great Recession, while the economy has grown at a modest rate of around 2 percent and the wage growth has also stuck to a moderate 2.5 percent. The Fed has raised borrowing costs twice this year.

Excluding food and energy prices, core producer prices still dipped by 0.1% in July after creeping up by 0.1% in June. The cost of food consumed at home increased 0.2 percent after dipping 0.1 percent in June.

The Labor Department said its consumer price index inched up by 0.1% in July after coming in unchanged in June.

Rental costs maintained their upward trend last month. Prices for apparel rose 0.3 percent after four straight months of declines.

For July, the CPI report showed that monthly wireless phone charges dropped 0.3 per cent.

It's not just down to the stats however, as tension continues to build over North Korea, with neither side backing down and the prospects of war all the more heightened, as reflected in safe haven assets, with gold having closed out Thursday at a 2-month high, with riskier assets on the decline and Dow Futures pointing to further declines at the open as Asian markets continue to reel at the prospect of war in the region.

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