Fed Dilemma With Core Inflation Rising as Real Wages Fall

US Consumer price inflation (CPI) for July was 0.3% as expected. YoY was 1.8% up from 1.6%. However real average earnings rose 1.3 y/y from 1.5% last month. The two month core CPI was the most since April 2006.

US Consumer price inflation (CPI) for July was 0.3% as expected. YoY was 1.8% up from 1.6%. However real average earnings rose 1.3 y/y from 1.5% last month. The two month core CPI was the most since April 2006.

Week to Week Pay

CPI

July CPI +1.8% vs +1.7% y/y expected Prior +1.6% y/y

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Ex food and energy 2.2% vs +2.1% y/y expected Prior  +2.1% y/y

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Month-over-month: CPI +0.3% vs +0.3% expected

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Ex food and energy +0.3% vs +0.2% expected

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  • 2-month rise in core CPI was the most since April 2006

Real Earnings

  • Real average hourly earnings – 0.1 % from June to July, seasonally adjusted
  • From a 0.3-percent increase in average hourly earnings combined with a 0.3-percent increase in the Consumer Price Index for All Urban Consumers (CPI-U).

US Real Earnings July 2019

  • Real average weekly earnings – 0.3 percent over the month due to the decrease of 0.1 percent in real average hourly earnings combined with a decrease of 0.3 percent in the average workweek.
  • Real average hourly earnings increased 1.3 percent, seasonally adjusted, from July 2018 to July 2019. The change in real average hourly earnings combined with a 0.6-percent decrease in the average workweek resulted in a 0.8-percent increase in real average weekly earnings over this period.
  • JulyReal avg hourly earnings +1.3% y/y vs +1.5% prior
  • Real avg weekly earnings +0.8% y/y vs +1.2% prior 

 

Tomorrow May PPI is due 

Source: BLS

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