US CPI up 2.7% in July, milk and beef among biggest price increases; Switzerland wants binding commitment from US on gold tax
The US consumer price index rose 2.7% in July from a year earlier, with food prices rising 2.9%, with milk and beef among the biggest increases. Switzerland wants a binding commitment from the US on gold tariffs.
Consumer price index in July increased 2.7% over the previous year
According to the latest report from the US Bureau of Labor Statistics (BLS), the Consumer Price Index (CPI) in July 2024 increased by 2.7% compared to the same period last year. This index measures the average change in the prices of goods and services that urban consumers have to pay over time.
While the overall CPI increased by 2.7%, the food price index recorded an increase of 2.9% compared to July 2023.
Dairy products and related items increased by 0.7% in July alone, with milk prices increasing by 1.9%.
Meat, poultry, fish and eggs rose 0.2% in the month, with beef up 1.5%.
The market is expecting the Fed to cut interest rates by 0.25% at its meeting on September 17. Some investors even believe that benign inflation data could pave the way for the Fed to cut by as much as 0.5%.
While the CPI did not fully support the dovish stance, the stock and financial markets did not appear to react negatively. Asian and European stocks were mixed, while the US market was expected to open slightly higher.
Larry Tentarelli, technical strategist at Blue Chip Daily Trend Report, said that while July inflation rose less than expected, the current high level still puts the Fed in a difficult position. "Two consecutive months of high inflation will make it harder for the Fed to justify a rate cut in September. We would only expect this to happen if the labor market weakens significantly over the next 45 days."
On the other hand, Jeffrey Roach, chief economist at LPL Financial, believes the Fed will still cut rates despite rising core inflation. "The economy is facing a situation of high inflation coupled with slow growth - a form of 'mild stagflation'. The Fed may prioritize supporting a weakening labor market over fighting inflation."
Switzerland wants binding commitment from Trump on gold tax
US President Donald Trump’s announcement that he will not impose tariffs on gold is a positive sign for trade stability, but only an official decision will bring certainty to the market, the president of the Swiss Association of Precious Metals (ASFCMP) said on Tuesday.
On Monday, Trump confirmed that he would not impose tariffs on gold, a move welcomed by the global gold market and ended speculation that the metal could be affected by current trade tensions.
Christoph Wild, President of ASFCMP, said Trump’s announcement was a welcome sign for trade stability. However, only a formal and binding decision would provide the stability the gold industry and its partners need.
