Bank of America Global Research discusses its reaction to today's US CPI report for the month of July.
"Core CPI rose 0.3% (0.33% unrounded) mom in July, coming in a touch below consensus at 0.4% mom and cooling off notably following the prior three months of average 0.8% spikes. Unfavorable base effects led to the % yoy rate dropping to 4.3% (4.27% unrounded) from 4.5% yoy in June. Headline CPI came in stronger at 0.5% (0.47% unrounded), boosted by a 1.6% pop in energy and 0.7% jump in food, which kept the % yoy unchanged at 5.4%," BofA notes.
"This month revealed significant cooling in transitory inflation. First on the goods shortages theme: used car prices edged up 0.2% mom, though new cars were much stronger at 1.7% mom. Given the signal from wholesale used car prices, which began to turn lower in June, we expect negative readings in CPI used cars beginning next month...Meanwhile, recreation and education/communication commodities saw stronger readings of 0.5% and 0.8%, respectively," BofA adds.