CPI data reveals: inflation slows, but hopes for rate cuts are dashed?

The latest CPI data is here! Although the monthly changes in both the headline CPI and the core CPI were in line with expectations, their actual index levels were slightly lower. This directly led to the annual reading of the headline CPI falling from the expected 3.0% to 2.9%, the lowest level since March 2021!

Housing inflation has quietly risen again this month, from 0.2% in June to 0.4%. However, overall super core service inflation (that is, the kind that does not include housing) is still mild, rising 0.21% this month, although it is higher than the slight declines in May and June.

These data tell us that inflation levels are indeed slowing, but price growth has not stopped suddenly, so hopes for a 50 basis point rate cut next month are dashed.