🔥US July CPI Data
Will be released on August 12, 2025, at 20:30 Beijing time.
The market generally expects a slight rebound in inflation, but the Federal Reserve's expectation for a rate cut in September remains high.
Data Expectations
Overall CPI is expected to increase by 0.2% month-on-month (0.3% in June), year-on-year rising to 2.8%; Core CPI (excluding food and energy) may rise by 0.3% month-on-month, year-on-year rising to 3.1%, reaching a new high since February.
Goldman Sachs, JPMorgan, and other institutions predict that the month-on-month increase in Core CPI will be between 0.3% and 0.35%, with year-on-year possibly reaching 3.08%-3.1%.
Tariff Impact
The July CPI is seen as a key signal to test the impact of Trump's tariff policy on consumer prices, with tariffs expected to directly push Core CPI up by about 0.12 percentage points month-on-month.
Wells Fargo pointed out that price adjustments are still in the early stages, and the digestion of corporate inventory and consumer fatigue may suppress the sustained rise in inflation.
Federal Reserve Policy
The market expects a more than 95% probability of a 25 basis point rate cut in September, mainly influenced by weak July non-farm employment data. Goldman Sachs believes that unless the month-on-month Core CPI exceeds 0.44%, the expectation of a rate cut is unlikely to change.
There are divisions within the Federal Reserve, with dovish officials emphasizing the need for accommodative policies due to a weak labor market, while hawks are concerned that inflation has not reached targets.
Market Reaction
JPMorgan predicts that if the month-on-month Core CPI exceeds 0.4%, the S&P 500 could drop more than 2%; if it is below 0.25%, it could rise by 1.5%-2%.
Data quality is in question: due to budget cuts at the US Bureau of Labor Statistics, some price data rely on estimates, which may lead to significant revisions later.
Long-term Outlook
Goldman Sachs expects that after excluding the impact of tariffs, the Core CPI may fall to 2.5% by the end of 2025; if tariffs are fully transmitted, the December Core CPI year-on-year may rise to 3.3%-3.5%.
Nomura Securities warns that if service prices rise significantly, it may enhance inflation stickiness, shaking the Federal Reserve's determination to cut rates.