Consumer Goods Prices Rise Most Since Nov 2012

Following the disappointing producer prices data last week, consumer prices were expected to rise modestly in July and the headline rose 0.3% MoM (es expected and up from 0.1% MoM in June) but Core CPI rose hotter than expected 0.3% MoM.

Headline CPI YoY is now rising faster than PPI for the first time since March 2017...

Source: Bloomberg

Year-over-year, both headline and core rose more than expected, but Core PPI has not been higher since July 2018 (as Core PPI plunges)

Source: Bloomberg

But, CPI Goods prices are up 0.4% YoY - while small, this is the hottest pace of inflation since Nov 2012...

Source: Bloomberg

Under the hood it appears tariffs are trickling through.

The index for used cars and trucks rose 0.9 percent in July following a 1.6-percent increase in June. The index for airline fares rose 2.3 percent in July after declining in June. The index for household furnishings and operations increased 0.4 percent, its third consecutive monthly increase, and the indexes for communication, for apparel, and for personal care each also rose 0.4 percent in July. Also increasing in July were the indexes for motor vehicle insurance, for tobacco, and for alcoholic beverages.  

The index for all items less food and energy rose 2.2 percent over the past 12 months. Most major component indexes increased over the past year, including shelter (3.5 percent) and medical care (2.6 percent). Exceptions include communication (-1.3 percent) and apparel (-0.5 percent).    

This is not good news for Powell (and stock market bulls) as it reduces any bullshit threat of deflation (though it is clear that China's recent devaluation will likely bring more downward pressure, but tariffs on a wide range of consumer products imported from China, set to take effect Sept. 1, may boost inflation further).