The release of the Consumer Price Index (CPI) data report yesterday drew significant attention as market participants and economists eagerly sought indicators to assess the trajectory of global markets and the overall economy. It is particularly crucial as it sheds light on the Federal Reserve's potential response to its upcoming meeting by the end of the month and to speculate the likelihood of the Federal Reserve’s adjustment on its implementing interest rate as a means of controlling the inflation.

The Global census outlook on overall June Core CPI increase by 0.3% resulting to a year-on-year rate at 5.0%, did over the 2.0% annual goal of the Fed. The anticipation for headline inflation to also increase by 0.3%, which would lower the year-over-year rate to 3.1%. Shelter costs are being closely watched as any decline in prices could potentially lead to additional disinflation and further an interest rate hike of 0.25% later this month.

Both the Headline and Core CPI showed a milder increase than anticipated, with a 0.2% monthly gain, with the monthly core increase being the smallest 1-month increase in that index since August 2021. Shelter experienced the most significant contribution to the monthly increase, with a 0.4% climb, including the smallest increase in a key measure of rent since the end of 2021. With CPI advanced to 4.8% which was the slowest movement since late 2021.

As the year progresses, housing is expected to exert a dampening effect on inflation indicators as housing costs are made up 70% of the overall increase in the monthly CPI. Prices for used cars fell 0.5%, which has been identified as one of the primary reasons for persistent inflation. Surprisingly, airline fares fell 3% on the month. Core services, excluding housing, exhibited minimal fluctuations in June compared to the previous month. Year-on-year, the growth rate slowed to 4%, representing the smallest increase since late 2021. Several indexes witnessed increases, including shelter, motor vehicle insurance, apparel, recreation, and personal care.

Overall, this news is positive for consumers, markets and the Fed, but the outcome of the CPI data makes it highly improbable for the Fed to be deterred from raising rates by a quarter point in the upcoming month.

With CPI rising 3% in June from a year ago, the slowest rate in more than two years, it does increase the possibility that this could be the final adjustment in the current cycle.

Stocks opened on a positive note, with the S&P 500 rising by 0.86% and the Nasdaq 100 increasing by 1.11%. 📈

Based on the facts, substantial progress has been achieved in controlling the inflation rate. Thus, we can conclude that the government CPI policies are the main driver on the macroeconomic outcome of the market such the decline in inflation alongside sustained growth indicates that their measures have been effective thus far. [Grin] [Sly]