US Inflation Stabilises Over July

The average cost of goods and services in the USA has stabilised following sharp falls at the beginning of the year. The closure of large parts of the US economy forced all CPI prices into deflation over March (-0.4%), April (-0.8%) and May (-0.1%), with recovery over June (0.6%) and now July, following another positive reading of 0.6%.

Rising crude oil prices were a major contributing factor to the latest data – whilst there were also strong gains in air fares, other lodging and used vehicle prices. Concerns surrounding a potentially cooling US housing sector were also raised as slowing rents were a slight drag on the numbers.

Figures released by the US Bureau of Labor Statistics also indicated the annual core Consumer Price Index (CPI) was up 1.6% year-on-year in July, further improving on last months 1.2% reading.

Inflation has remained quiet in the US, despite the Federal Reserve’s emergency liquidity package announced back in March. There has been little concern over the readings since the Covid-19 crisis began and its influence over the currency markets remains relatively weak.

Elsewhere, Russia announced that it registered the first coronavirus vaccine but also skipped the all-important Phase 3 trials. The number of confirmed cases globally recently topped the 20 million mark with the US remaining one of the worst affected areas, accounting for over a quarter of cases.