The latest US Consumer Price Index (CPI) data for July shows a continued slowing of inflation, with both the headline and core CPI numbers coming in below expectations. According to UBS, the seasonally adjusted headline CPI increased by just 0.07% in July, lower than both their own projection and the average of BBG consensus expectations. This marks a deceleration from the previous month’s increase of 0.42%, indicating a slowing trend in inflation.

The core CPI also showed a slower rate of growth, increasing by 0.22% on a seasonally adjusted basis. While this is higher than last month’s increase of 0.02%, it is still below both UBS’s projection and the BBG consensus average. The slowing of core CPI inflation suggests that the recent trend of moderating prices may continue in the coming months.

One notable factor contributing to the slower inflation rate was a decrease in gasoline prices, which fell by less than last month but still had an upward influence on the headline CPI. However, beyond this, there were some unexpected areas of weakness in the report, such as apparel, transportation services, communication services, and medical care services, which all showed price decreases in July after surprisingly strong increases in June.

Overall, while the slowing of inflation in July’s CPI report is a positive development for consumers and businesses alike, it is important to note that the trend of moderating prices may not continue unchecked. UBS expects further slowing in both headline and core CPI inflation in the coming months, but cautions that there could be some upside surprises before then. As always, it is essential to stay informed and adapt to changing economic conditions.