US consumer prices tick up just 0.1% as inflation stays tame

Marco Green
July 13, 2019

"He has provided a loser monetary policy base for gold prices gain further", said Howie Lee, an economist at OCBC Bank.

With more than 20 years' trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa.

On Wall Street, the benchmark S&P 500 index ticked upward as technology shares rose, though it momentarily pared some gains after US President Donald Trump said on Twitter that China was not living up to promises it made on buying US agricultural products. SHFE copper advanced 0.13%, tin increased 0.27%, lead went up 0.09%, nickel expanded 0.69%, while zinc dipped 0.44%, and aluminum fell 0.72%.

Economists polled by Reuters had forecast the CPI unchanged in June and core inflation gaining 0.2%.

The overall CPI edged up 0.1% last month, held back by cheaper gasoline and food prices.

As recently as a May 1 news conference, Powell had characterized lower inflation since the start of the year as merely "transitory", blaming trends such as a drop in clothing prices. The CPI rose 0.1% in May.

This was the 11th month in a row that core inflation has been reported in line with, or above, the Federal Reserve's target of 2%. Core prices had been expected to edge up by 0.2 percent. Trump wrote on Twitter earlier this month, the latest in a series of unprecedented attacks on the independence of the Fed by a sitting president.

Powell last month said that many central bankers believed the case for lower rates "had strengthened", given the rising "crosscurrents" in the economy. Inflation rose 1.6% year-over-year in June, as expected, but core inflation rose slightly to 2.1%, versus the expected 2%.

Markets immediately moved to price-in a 30 per cent chance of a 50 basis-point rate cut at the end of July.

Rep. Maxine Waters asked on Wednesday: "If the president called you, today or tomorrow, and said, 'I'm firing you". Again you can get a confirmation from the composite dollar index that reflects the way the dollar performs against a basket of currencies and it was down 0.2%, from 97.104 to 96.906.

"Its critical that the public understand that we're always going to do our work objectively", Powell said.

Neither Barkin nor Bostic have a vote this year on the Fed's rate-setting committee.

"The labor market has not weakened in a meaningful way since the escalations in trade policy a few months ago", said Daniel Silver, an economist at JPMorgan in NY. "It has really slowed down here, and one of the reasons is uncertainty around trade and global growth", Powell continued. Their biggest concern is that when businesses and consumers expect ultra-low inflation to remain in place, they factor it into decisions, such as how much they're willing to spend or raise pay.

MSCI Asia-Pacific index up 0.2%, Nikkei adds 0.15%. Healthcare costs increased 0.3 per cent, after a similar advance in May. There was a 1.1% surge in the cost of dental services, but prescription drug prices fell 0.6%. Prices for these goods tumbled in March and April after the government introduced a new method and data to calculate their cost.

Eight of the 11 major sectors were lower led by health care which fell 2.9 per cent. CannTrust's problems pushed its shares down nearly two per cent on the day and 37.5 per cent since Monday when it announced an investigation by Health Canada.

Other reports by Click Lancashire

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