US CPI Review: July 2023

As expected, annual headline CPI inflation fell in July, while core CPI inflation moderated - I currently expect the same to occur in August.

Executive summary

• For the first time since June 2022, headline CPI inflation saw an increase in its annual growth rate, rising from 3.0% in June, to 3.2% (3.18%) in July.

  • Headline CPI: 3.2% (3.18%) vs my estimate of 3.2% (3.16%) vs consensus 3.3%

• Meanwhile, core CPI growth moderated for the fourth consecutive month, falling from 4.8% in June, to 4.7% in July.

  • Core CPI: 4.7% (4.65%) vs my estimate of 4.6% (4.63%) vs consensus 4.8%

• Once adjusted for spot market rents, both headline and core CPI inflation remained below 2% YoY:

  • CPI adjusted for spot market rents: 0.5% (0.53%) vs my 0.5% (0.52%) estimate

  • Core CPI adjusted for spot market rents: 1.3% (1.25%) vs my 1.2% (1.23%) estimate

• With wholesale used car prices (as per the Manheim Index) having recorded several months of significant declines, the CPI’s used car & truck price index recorded a MoM decline in July — but it was less than implied by the Manheim Index.

• While CPI food at home prices saw an uptick in MoM growth, CPI food away from hom…