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Aug 09 - 06:55 PM

Credit Agricole: Expectations for U.S. July CPI – Encouraging Signs of Stability

By eFXdata  —  Aug 09 - 03:00 PM

Credit Agricole lays out their expectations for the U.S. Consumer Price Index (CPI) for the month of July, highlighting encouraging signs and the potential stabilization of inflation, building on the trend from June.

Headline CPI: The bank expects headline CPI to rise on a year-over-year (y/y) basis for the first time since the peak last June, ticking up to 3.2% from 3.0%, with the NSA index at 305.813. However, this change is heavily influenced by base effects. On a month-over-month (m/m) basis, Credit Agricole looks for a 0.2% increase, marking a third straight month at this pace or below, resulting in the three-month annualized pace dropping close to 2%.

Core CPI: Credit Agricole forecasts core CPI to rise 

0.2% m/m for a second straight month after recording 0.3% or higher in previous months since September 2021. This would see the y/y pace slightly decline to 4.7% from 4.8%, but the three-month annualized pace would be just above 3% after being above 5% in May.

Key Points:

  1. Encouraging Signs: Credit Agricole looks for the July CPI report to reflect positive trends, though these may not be immediately apparent in y/y readings.

  2. Headline CPI Rise: Expectation of a rise in headline CPI to 3.2% y/y, driven by base effects. On a m/m basis, a 0.2% increase is expected, indicating a slowing annualized three-month pace.

  3. Steady Core CPI: Core CPI is expected to rise 0.2% m/m for a second consecutive month, leading to a y/y pace of 4.7%. The three-month annualized pace would be just above 3%.

  4. Building on June Trend: The bank sees a continuation of the trend observed in June, reflecting a more stable inflation scenario.


Credit Agricole's expectations for the U.S. July CPI report indicate signs of inflation stabilization, with a modest rise in headline CPI y/y and a steady core CPI. The bank anticipates the report to demonstrate a third straight month of a 0.2% m/m increase in headline CPI and a continuation of the trend towards more moderate inflation. The forecast also emphasizes the influence of base effects and acknowledges the complexity of the data, which requires close examination to discern the encouraging details.

Crédit Agricole Research/Market Commentary


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