Samuel Tombs, chief US economist at Pantheon Macroeconomics, said the moderate July US consumer price index, together with soft employment data, gives the Federal Open Market Committee solid grounds to hold policy rates steady at next month's meeting. Core CPI rose 0.2% month-on-month, boosted by airfares and medical care services, but services prices excluding those two categories rose only slightly. He noted that core goods prices rose 0.2%, the largest increase since September, driven by price hikes of 15% to 30% on many Apple products other than the iPhone. Both regular rent and owners' equivalent rent rose 0.26%, roughly in line with the average of the past 12 months. With August CPI due before the next FOMC meeting and the course of the Iran conflict still uncertain, the possibility of a September rate hike cannot be completely ruled out. However, he said these figures are unlikely to encourage other meeting participants to join the three who already support further tightening. If the labour market remains weak and slowing services inflation restrains further goods price increases, the FOMC will likely keep policy rates at current levels through the end of the year.
Apple Inc.Article notes Apple raised prices on many products 15-30%, contributing to core goods inflation, which may support higher rates.
