Fresh data shows inflation’s trending down, boosting hopes of a big rate-cut fall

It’s a trend… and your wallet’s grateful. Fresh #s this week showed that inflation’s continuing to cool. Yesterday, the consumer-price index (CPI) showed that annual inflation fell to 2.9% last month — its slowest pace since March 2021. On a monthly basis, consumer prices ticked up 0.2% in July (in line with expectations) after dipping in June. Rising housing costs accounted for nearly 90% of the monthly increase (#RentAnxiety). Some highlights:

• Eggception: Food inflation was up just 0.2%, but egg prices rose a whopping 5.5% from June to July.

• Wedding-szn bargains: Prices for men’s suits, sport coats, and outwear were down 4% month over month.

Hoping for a big-cut fall… While hot rate-cut summer failed to materialize, traders seem certain that the Fed will start trimming at its September meeting. The CPI isn’t the only report boosting rate-cut expectations: July producer prices came in cooler than expected this week, falling by the most in over a year. The Fed’s in charge of keeping inflation in check while ensuring the labor market’s healthy. After years of lofty interest rates, the labor market’s starting to cool, and last month’s bummer jobs report showed that unemployment spiked. Those trends suggest it’s time to start trimming:

• At its meeting last month, the Fed suggested that it’s less hawkish on crushing inflation and that it’s starting to worry about the labor situation.

• Next week, we’ll get notes from the Fed’s July meeting, but the most up-to-date comments could come from Fed Chair Powell’s speech at Jackson Hole.