The core inflation rate in the United States in July reached 3.1% year-on-year, higher than expected and the highest in 5 months.

The annual core CPI rate in the U.S. remained at 2.7% in July, lower than the market forecast of 2.8%, suggesting that inflation pressures are still present but with some differentiation.

MAIN CONTENT

  • The core inflation rate in the U.S. (core CPI) rose to 3.1% in July, exceeding forecasts.

  • The annual core CPI index remained stable at 2.7%, lower than the expected 2.8%.

  • This is the highest core CPI increase in the last 5 months.

How does rising U.S. core inflation affect the economy?

The data shows that the 3.1% increase in annual core CPI in July exceeded the forecast of 3.0%, reflecting a rise in core living costs, aside from the volatile energy and food prices.

The increase in core CPI often prompts policymakers to adjust interest rates to control inflation, affecting investment and consumption decisions of businesses and individuals.

This data also shows that inflation pressures remain pronounced, requiring close monitoring by financial institutions and central banks.

The significance of the core CPI index remaining at 2.7%

The annual core CPI index remained unchanged at 2.7% in July, not increasing as predicted at 2.8%, indicating temporary stability in price pressures outside of energy and food groups.

This indicates that some underlying factors in the economy have yet to create new price pressures, helping to somewhat alleviate concerns about sudden high inflation.

However, this stability does not mean that inflation will decrease soon, as other indicators still show signs of rising prices.

The 3.1% increase in core CPI in July indicates that the U.S. economy is still facing persistent inflation pressures, requiring timely adaptive monetary policy measures.

Jim O’Neill, economic expert, August 2023

What are the reasons for the strong increase in core CPI in July?

The increase in core CPI may stem from rising prices of domestic services and goods, reflecting partly high purchasing power and increased production costs due to supply chains not fully recovering.

The rise in core inflation in July is also related to the continued increase in rental prices and healthcare costs, which are considered two factors not easily volatile in the short term.

This reality increases challenges for monetary policy as it has to balance between controlling inflation and supporting economic growth.

What are the differences between core CPI and market expectations?

The core CPI data rose by 3.1%, exceeding expectations of 3.0%, while the annual core CPI index stood at 2.7%, lower than the forecast of 2.8%, reflecting differentiation among inflation measurement components.

This difference warns investors and policymakers to closely monitor each component in the price basket to determine inflation trends.

At the same time, it also indicates that the market may assess more cautiously the likelihood of further interest rate hikes in the monetary policy cycle.

Frequently Asked Questions

What is core CPI and why is it important?

Core CPI is the consumer price index that excludes energy and food prices, helping to reflect a more stable underlying inflation trend, which is crucial for assessing long-term price pressures.

Why does a rise in core CPI affect monetary policy?

The increase in core CPI signals persistent inflation pressures, prompting the central bank to consider tightening interest rate policies to maintain price control targets.

Does a stable core CPI mean inflation has decreased?

Not necessarily, a stable core CPI may indicate some stability in underlying prices, but other factors can still cause inflation such as energy prices and services that have not yet decreased.

What is the difference between total CPI and core CPI?

Total CPI includes all types of goods and services, which can be volatile, while core CPI excludes volatile groups to measure underlying inflation more accurately.

Does a high core CPI affect cryptocurrency investors?

Core CPI impacts interest rates and macroeconomic measures, thus affecting sentiment and investment strategies in the cryptocurrency market as well as other risk assets.

Source: https://tintucbitcoin.com/cpi-loi-my-tang-cao-nhat-5-thang/

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