The U.S. Bureau of Labor Statistics (BLS) released their July Inflation report on August 13th 2019, for the 12 months through July 2019.
Annual Inflation is Up
- Annual inflation in July was 1.81% up from June’s 1.65% almost identical to May’s 1.79% and March’s 1.86% but below April’s 2.00%.
- CPI Index in July was 256.571, June was 256.143, May was 256.092. April’s was 255.548 and March was 254.202.
- Monthly Inflation for July was 0.17%, June was virtually zero at 0.02%, May was 0.21%, April was 0.53%, March was 0.56%. June 2018 was 0.16%.
- Quantitative Tightening (QT) continued but the FED says it is stopping. Check it out here.
- What is Quantitative Tightening?
- Next release September 12th
Annual inflation for the 12 months ending in July was 1.81% which is below the FED target of 2.00%. At the end of July, FED Chairman Jerome Powell announced the expected lowering of interest rates but he threw a bit of a zinger in by not promising more cuts to come. The market got a bit jittery and then Trump announced more sanctions on China which threw the market into a tailspin. But on August 12th Trump backed off and the markets rebounded on the 13th but lost all the gains on the 14ths opening.
According to the BLS commissioner’s report, “The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in July on a seasonally adjusted basis after rising 0.1 percent in June, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.
Increases in the indexes for gasoline and shelter were the major factors in the seasonally adjusted all items monthly increase. The energy index rose in July as the gasoline and electricity indexes increased, though the natural gas index declined. The index for food was unchanged for the second month in a row, as a decline in the food at home index was offset by an increase in the food away from home index.
Read the full commentary here.
Seasonally Adjusted Inflation Table
From the July 2019 column in the table above we can see that on a monthly seasonally adjusted basis the entire Energy category was up 1.3% after being down -2.3% in June. Gasoline, however, was the largest monthly gainer being up 2.5%. On a Non-adjusted annual basis, however, gasoline was actually down -3.3% over the year and fuel oil was down -6.0%. On an annual basis shelter was the largest gainer at 3.5%, followed by Medical care services at 3.3%.
Current Inflation Chart
Last month we said, that the 10-year inflation chart looks like it is getting less volatile (i.e. the blue converging lines) and is settling down in the middle of the road near the 2.00% FED target. And wondered if after 100 years the FED has finally gotten the hang of managing inflation. We also suggested that it was probably just a decrease in volatility after the massive crash of 2008. This month, the convergence continues. In the stock market, this would be called “pennant” formation setting up for a massive breakout in one direction or the other.
Federal Reserve Actions
For some months now we have blamed the 2018 year-end market crash on the Federal Reserve’s actions as they clamped down on the economy, both in raising interest rates and in eliminating the debt it acquired during its Quantitative Easing thus beginning its Quantitative Tightening (QT). QT continued throughout July but once again the FED proclaimed that they were going to stop QT. So we will keep watching FED total assets and see what happens.
FED Funds Rate
See our Moore Inflation Predictor to see our current projections.
Not Seasonally Adjusted Monthly Inflation Rates
See: Monthly Inflation Rate for more information and a complete table of Unadjusted Monthly Rates.
The misery index as of August 2019 (based on the most recent official government inflation and unemployment data for the 12 months ending in July) is at 5.51% up from 5.35% in June but below the 5.88% in December 2018.
It had reached a low of 5.32% in February 2019. But it was 6.87% in July 2018 and 7.44% in February 2017.
NYSE Rate of Change (ROC)©
Unfortunately, after generating the buy signal in March the market lost a bit of ground. So rather than getting a decisive cross, we got mixed signals. As of July, the buy signal was back in effect but in August it is once again below giving us a “whipsaw effect”.
See the NYSE ROC for more info.
NASDAQ Rate of Change (ROC)©
Hold Signal! Unlike the NYSE, the NASDAQ- ROC remains below the moving average.
See NASDAQ ROC for more.
Regional Inflation Information
The U.S. Bureau of Labor Statistics also produces regional data. So if you are interested in more localized inflation information you can find it here.
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