US consumer prices increase moderately in July; data quality concerns rising
The consumer price index rose 0.2% last month after gaining 0.3% in June, the Labor Department's Bureau of Labor Statistics said on Tuesday. In the 12 months through July, the CPI advanced 2.7% after rising 2.7% in June. Economists polled by Reuters had forecast the CPI rising 0.2% and increasing 2.8% year-on-year.
Excluding the volatile food and energy components, the CPI rose 0.3%, the biggest gain since January, after climbing 0.2% in June. The so-called core CPI increased 3.1% year-on-year in July after advancing 2.9% in June.
The Federal Reserve tracks different inflation measures for its 2% target. Prior to the CPI data, financial markets expected the U.S. central bank would resume cutting interest rates in September after July's weak employment report and sharp downward revisions to the nonfarm payrolls counts for May and June.
The Fed left its benchmark overnight interest rate in the 4.25%-4.50% range last month for the fifth straight time since December.
The CPI report was published amid mounting concerns over the quality of inflation and employment reports following cuts in budget and staffing that have led to the suspension of data collection for portions of the CPI basket in some areas across the country.
Those worries were amplified by President Donald Trump firing Erika McEntarfer, the head of the BLS, early this month after stall-speed job growth in July, reinforced by sharp downward revisions to the May and June nonfarm payrolls counts.
The suspension of data collection followed years of what economists described as the underfunding of the BLS under both Republican and Democratic administrations. The situation has been exacerbated by the Trump White House's unprecedented campaign to reshape the government through deep spending cuts and mass layoffs of public workers.
Citing the need to "align survey workload with resource levels," the BLS suspended CPI data collection completely in one city in Nebraska, Utah and New York. It has also suspended collection on 15% of the sample in the other 72 areas, on average.
This affected both the commodity and services pricing survey as well as the housing survey, which the BLS said resulted in the number of collected prices and the number of collected rents used to calculate the CPI temporarily reduced. That has led to the BLS using imputations, opens new tab to fill in the missing information.
The share of different cell imputation in the CPI data jumped to 35% in June from 30% in May.
Different cell imputation, which the BLS uses when all prices are unavailable in the home cell, maintains the item category but expands geography. The home cell method, considered by economists as higher quality, uses the average price of the same item in the same location as the missing product's price.
The use of different cell imputation has grown from a share of only 8% in June 2024. Economists said while these measures adopted by the BLS will not introduce bias in the CPI data, the volatility was a cause for concern.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Independent
13 minutes ago
- The Independent
Brazil's Lula announces $5.5 billion in credits for exporters hit by US tariffs
The Brazilian government on Wednesday unveiled a plan to support local exporters affected by a 50% tariff imposed by U.S. President Donald Trump on several products from the South American nation. Dubbed 'Sovereign Brazil," the plan provides for a credit lifeline of 30 billion reais ($5.5 billion), among other measures. Brazil's President Luiz Inácio Lula da Silva described the plan, which includes a bill to be sent to Congress, as a first step to help local exporters. Congressional leaders attended Wednesday's ceremony, a first in months, in a sign of growing political support for the leftist leader in response to Trump's tariffs. Other measures announced by the Brazilian government include postponing tax charges for companies affected by U.S. tariffs, providing 5 billion reais ($930,000) in tax credits to small and medium-sized companies until the end of 2026 and expanding access to insurance against cancelled orders. The plan also incentivizes public purchases of items that could not be exported to the U.S. 'We cannot be scared, nervous and anxious when there is a crisis. A crisis is for us to create new things,' Lula said. 'In this case, what is unpleasant is that the reasons given to impose sanctions against Brazil do not exist.' Jair Bolsonaro, who is currently under house arrest.
Reuters
14 minutes ago
- Reuters
S&P 500, Nasdaq near record highs on rate cut hopes; Big Tech stocks weaken
NEW YORK, Aug 13 (Reuters) - The benchmark S&P 500 and Nasdaq hovered near record highs on Wednesday, but the market reflected weakness in some technology stocks after the previous day's strong gains on hopes that the Federal Reserve was getting close to a monetary easing cycle. Signs that U.S. tariffs on imports have not fully filtered into headline consumer prices came as a relief for investors this week as they scour for insight on the impact of trade uncertainty on the economy. Some large technology stocks including Nvidia (NVDA.O), opens new tab, Alphabet (GOOGL.O), opens new tab and Microsoft (MSFT.O), opens new tab - among the so-called Magnificent Seven stocks - were lower as investors searched for new growth drivers. "Valuations are elevated. I do think, though, at the end of the day, the key will be the delivery of earnings, and that's what we're seeing," said Katherine Bordlemay, co-head of client portfolio management, fundamental equities at Goldman Sachs Asset Management. She said the dispersion of stock-level returns in the U.S. is at one of the higher levels of the last 30 years. At 2:23 p.m. EDT, the Dow Jones Industrial Average (.DJI), opens new tab rose 391.83 points, or 0.88%, to 44,850.44, the S&P 500 (.SPX), opens new tab gained 12.63 points, or 0.19%, to 6,458.25 and the Nasdaq Composite (.IXIC), opens new tab gained 22.78 points, or 0.11%, to 21,704.69. The blue-chip Dow was within 1% of an all-time high and the Russell 2000 index (.RUT), opens new tab, which tracks rate-sensitive small-cap companies, added 1.4% to hit a six-month high. Traders are now fully pricing in a 25 basis-point interest rate cut, according to the CME's FedWatch Tool. The central bank last lowered borrowing costs in December. Treasury Secretary Scott Bessent said on Wednesday he thought an aggressive half-point cut was possible, given recent weak employment numbers. Investors were also taking notice of other sectors following the recent tech-led rally in U.S. stocks that has pushed valuations of the S&P 500 above long-term averages. Healthcare stocks (.SPXHC), opens new tab, which have been beaten down for much of the year, led gains among the 11 S&P 500 sectors, with a 1.2% rise. Chicago Federal Reserve President Austan Goolsbee said on Wednesday the U.S. central bank is grappling with understanding whether tariffs will push up inflation just temporarily or more persistently, which would inform its decision on when to cut interest rates. CoreWeave (CRWV.O), opens new tab, which is backed by Nvidia (NVDA.O), opens new tab, slumped 17% after the AI data center operator reported a bigger-than-expected quarterly net loss. Eyes were also on developments surrounding the China revenue-sharing deal the U.S. government signed with top chipmakers, which the White House said could be expanded to others in the sector. Paramount Skydance (PSKY.O), opens new tab jumped 38%. The company won exclusive broadcasting rights to the Ultimate Fighting Championship for seven years earlier this week. In geopolitics, traders were keen on a meeting between U.S. President Donald Trump and Russian President Vladimir Putin on the war in Ukraine, scheduled on Friday. Advancing issues outnumbered decliners by a 3.18-to-1 ratio on the NYSE. There were 549 new highs and 47 new lows on the NYSE. On the Nasdaq, advancing issues outnumbered decliners by a 2.27-to-1 ratio. The S&P 500 posted 37 new 52-week highs and two new lows while the Nasdaq Composite recorded 140 new highs and 55 new lows.
Reuters
14 minutes ago
- Reuters
Burghley Capital: BoE Rate Cut Signals Cautious Policy Path
LONDON, United Kingdom, August 13, 2025 (EZ Newswire) -- Burghley Capital, opens new tab positions the Bank of England's latest interest rate decision within the broader context of monetary policy recalibration, noting the complex trade-off between inflation control and growth stability. The Monetary Policy Committee votes by a narrow 5–4 margin to reduce the Bank Rate from 4.25% to 4.00%, a move requiring a second ballot not used since 1997. Sterling appreciates to $1.35 per £1, while short-dated gilt yields edge higher and equity markets close lower, reflecting a rebalancing of expectations for the remainder of the year. Division within the committee highlights differing assessments of the economic outlook Four members support holding rates at 4.25% due to concerns over slowing disinflation and the risk of inflation expectations embedding into wage dynamics. Four others favour a 0.25 percentage point cut, citing evidence of sustained underlying disinflation, while one member initially calls for a 0.50 percentage point cut before aligning with the quarter-point reduction in the final vote. The outcome underscores what Burghley Capital describes as a deliberate, step-by-step policy stance that avoids premature easing. Household impacts are uneven For borrowers on tracker mortgages, a typical outstanding balance of £140,000 (approximately $189,000) translates into monthly repayments falling by about £28.97 (around $39.11). However, 7.1 million of the UK's 8.4 million residential mortgages are fixed-rate, meaning most borrowers will not see immediate payment relief. Burghley Capital's analysis notes that the near-term boost to household spending is therefore likely to be modest. Inflation remains the key constraint on further easing Consumer price inflation reaches 3.6% year-on-year in June 2025, up from 3.4% in May. Food prices rise 4.5% year-on-year, the highest since February 2024, while services inflation stays elevated at 4.7%, reflecting persistent domestic cost pressures. Labour market conditions show early signs of cooling, with unemployment at 4.7% for the three months to May 2025 and the vacancy-to-unemployment ratio slipping below its equilibrium level. Markets respond with a measured repricing of assets The pound strengthens 0.4% against the U.S. dollar to $1.35 and 0.6% against the euro. Two-year gilt yields increase by 6 basis points to 3.887%, reflecting reduced expectations for rapid easing. The FTSE 100 ends lower. According to Burghley Capital's analysis, these moves indicate that while investors see the Bank's decision as measured, they remain cautious about the prospect of further cuts in 2025. Current market consensus anticipates no further adjustments until early 2026 Burghley Capital projects the Bank Rate settling at approximately 3.75% in the first quarter of next year, conditional on continued disinflation and stable employment data. The firm's analysis also highlights a growing divergence between the Bank of England and the European Central Bank, which has enacted eight rate cuts since June 2024, reducing deposit rates by around 50% from their peak. This divergence has potential currency and asset allocation implications for institutional investors. Economic growth indicators present a mixed picture UK GDP is forecast to expand by 1.25% in 2025, up from earlier 1% projections, but quarterly momentum slows sharply from 0.7% in Q1 to 0.1% in Q2. Corporate insolvencies rise 13% between the first and second quarters, while small business confidence remains in negative territory. Burghley Capital's analysis suggests that such conditions favour quality balance sheets, resilient cash flows, and prudent leverage strategies in both public and private markets. Conclusion Burghley Capital concludes that the Bank's cautious, data-dependent approach will remain the dominant feature of UK monetary policy into 2026. The firm notes that rate-sensitive assets, selective credit opportunities, and currency-aware strategies could benefit from this environment, provided investors maintain flexibility and a disciplined approach to capital allocation. About Burghley Capital Founded in 2017, Burghley Capital Pte. Ltd. (UEN: 201731389D) is a Singapore-based global investment management firm specialising in long-only asset management strategies. The firm delivers institutional-grade research, tailored portfolio design, and advisory services to both institutional and private investors. By combining rigorous analytical methods with disciplined investment practices, Burghley Capital seeks to deliver consistent returns and long-term portfolio resilience. For more information, visit opens new tab or our resources page at opens new tab. Media Contact Martin ### SOURCE: Burghley Capital Copyright 2025 EZ Newswire See release on EZ Newswire
