**As seen in Risk In The Week report 09/08/23, subscribe at cablefxm.co.uk/reports
U.S. headline inflation rebounded in July to 3.2% Y/y from the prior 3.0%, however, the print was below the consensus median of 3.3%. The uptick in prices shrank the gap between headline and core inflation after reaching the widest level since 2015. July core CPI continues to ease at a very slow pace after it rose by 4.7% Y/y from the prior 4.8%, in line with estimates. Food prices rose faster than the prior month at 0.2% M/m, shelter prices increased by 0.4%, and energy inflation fell by 0.1%, the latter posted the largest change as it had increased by 0.6% in June. The August inflation report will be key as the FOMC September policy decision follows. Economists expect the headline to continue rising, some have noted the increase in crude oil prices as a driver. A measure of U.S. national gasoline prices rose for every week of August except the one ending on the 25th, this followed a rise of 5.7% in July. The desk at UBS noted U.S. gasoline prices rising by 11.0% in August, they pencil headline CPI accelerating to 0.62% M/ m vs the consensus of 0.52%. If their prediction materializes, the August monthly CPI rise will be the largest in a year. On a Y/y UBS sits with the consensus at 3.6%. Economists at CIBC said that while the OPEC+ decision is likely to impact gasoline prices ahead, one component alone may not be able to change the overall direction of inflation. CIBC reminded us that the Fed and global central banks have tightened rates and while oil supply is supportive of higher crude prices, demand might not as consumers face challenges elsewhere.
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