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Why the Drop in Inflation Was Such a Big Deal

Why the Drop in Inflation Was Such a Big Deal

July 31, 2023

Why the Drop in Inflation Was Such a Big Deal

Offered by Rob Taylor

Sometimes, a picture is worth 1,000 words. So I decided to include an image of the June Consumer Price Index (CPI) report to help put inflation in better perspective:

Core CPI, which excludes volatile food and energy prices, rose just 0.16 percent for the month, the lowest reading in more than two years and a significant downside break. There are a number of reasons why it was such a big deal, including:1

  • It was a downside surprise compared to the consensus estimate of 0.30%.
  • On a YoY basis, 0.16% translates to 1.92% inflation on an annual basis. Whoa!
  • It may give the Fed some flexibility with interest rates in the second half of 2023.
  • June’s Producer Price Index, released the day after the June CPI report, rose less than expected, building on the optimism about inflation.

I don’t put too much weight on individual reports, so at this point, I’m looking for more information before drawing any conclusions about the economy, inflation, and interest rates.

Also, inflation is tricky, and people can have different experiences with rising prices depending on their spending habits. So please, contact me if you are concerned about inflation. Reports showing inflation is trending lower are great, but your experience with inflation matters most to me.

1. CNBC.com, July 13, 2023. “S&P 500 rises for a fourth day on more encouraging inflation data.”

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.

DISCLAIMER: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Global View Capital Advisors. LTD (GVCA) or any of its affiliates. The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.