Jul 2024 CPI Estimate

Wednesday at 8:30 am ET we will get the long-awaited Jul CPI. CPI is the most important macro print this week and this month. This month’s CPI will be an important piece of the puzzle for determining whether and by how much the Fed might cut rates in Sep.

So far in 2024 CPI figures have been all over the place. In Q1 headline CPI was hotter than expected, but in Q2 it was quite cool, primarily due to May and Jun. Although hotter headline CPI in Q1 this year came after quite tame reads in Q4 2023, Q2 2024 actually ended up being -0.1 pp below cool Q4 2023 MoM figures.

On average, core CPI in Q2 2024 was also -0.1 pp below Q4 2023 MoM figures.

My average error for estimating headline CPI (based on last 17 CPI estimates from Feb 2023 - Jun 2024) remained at almost perfect -1 bps (-0.01 pp).

My average error for estimating core CPI (based on last 17 CPI estimates from Feb 2023 - Jun 2024) remained at extremely low -2 bps (-0.02 pp).

For public links to my prior month CPI estimates go to ArkominaResearch.com.

The market is currently expecting a first cut in Sep. A hotter Jul CPI print could possibly make Sep cut less probable or even push the first cut further out (depending how high the numbers are). On the other hand, a cooler print could even possibly raise a probability for higher-than-25-bps cut in Sep (depending how low the numbers are) so everyone is impatient to learn what happened with CPI in Jul.

My CPI estimates are…

• Headline CPI

  • +0.1% MoM (-0.1 pp lower than both consensus and the Cleveland Fed)

  • +2.9% YoY (same as consensus and -0.1 pp lower than the Cleveland Fed)

• Core CPI

  • +0.1% MoM (-0.1 pp lower than consensus and -0.2 pp lower than the Cleveland Fed)

  • +3.2% YoY (same as consensus and -0.1 pp lower than the Cleveland Fed)

My unrounded estimates:

If CPI comes as I expect, this may be enough to support the Fed rate cut in Sep. Whether they end up going 25 bps or 50 bps at their next meeting, might in the end depend on Aug Employment Report and Aug CPI which we will get in early and mid-Sep.

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If you’re interested in learning my longer-term CPI estimates (including Aug and Sep), consider subscribing to Marko’s CPI Report which goes out each month before CPI and, among other things, contains analyses of:

1. Forward looking inflation indicators

2. Detailed Jul CPI estimate

3. Headline and core CPI trajectory until the end of Q2 2025

To get Marko’s CPI Report, make sure to subscribe to Arkomina Research Pro Investor at this link: ArkominaResearch.com/Subscriptions/

By subscribing to Pro Investor you also get:

1. Marko’s Fed report that goes out before each Fed meeting and, among other things, contains a detailed analysis of the economy and what type of landing we are in, an analysis of monetary policy lags, what will the Fed likely do in 2024 and early 2025, headline and core PCE inflation trajectory and unemployment rate trajectory

2. Marko’s Brain Daily that goes out each trading day containing analyses of all relevant macro indicators and events (such as Fed speeches and Fed meetings) prior day, my estimates for all important macro indicators coming out that day and how the market may react to each scenario, as well as my view of the equity and bond market short-term direction, earnings analyses and much more

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