The CPI (consumer price inflation), published by the U.S. Bureau of Labor Statistics, remained unchanged in July. The energy index fell by 1.6% in July after increasing for the last four months. The sharp decline in energy inflation was primarily attributed to the fall in gasoline prices. The other energy inflation index sectors remained mixed. Core inflation excludes food and energy—it rose by 0.1% in July. Inflation rose in the medical sector—medical care commodity inflation rose by 0.4% and medical care services rose by 0.5%.
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Read Could the Rise in Retail Sales and CPI Impact Portfolios? for more details on how inflation rose in June.
The Fed’s monetary policy is decided by multiple inflation statistics among other indicators. Last week, retail sales and the producer price index had a negative bias. Read Fed Rate Hike Prospects Dampened By Retail Sales And Inflation Release? to learn more. The weak data release since the last Fed meeting would decrease the odds of a possible rate hike in the Fed’s September meeting.
Looking at how the CPI impacted the Market (SPY), energy prices saw a major fall in terms of consumer prices. Energy-based equities Abraxas Petroleum (AXAS) rose by 0.72% and Anadarko Petroleum (APC) fell by 0.86%. The broad-based SPDR S&P 500 ETF (SPY) fell by 0.52%. Online retail companies were on a negative bias after the inflation release. Amazon.com (AMZN) fell by 0.58%, while eBay (EBAY) fell by 0.71%.