A Change In CPI Methodology Is About To Send Core CPI Sharply Higher

Three months ago, when the normalization in base effects was the driving force behind annual inflation, we said - correctly - that US CPI was set for a historic drop over the next two months. In fact, the realized drop was even bigger than expected, with the predicted 3.2% June CPI actually printing at 3.0%...

... but judging by the increase in July headline inflation to 3.2%, June may very well have been the headline low for the cycle (ignoring that core CPI remains stubbornly elevated in the mid-4% range).