United States: inflation data generated relief and positive signals in the markets
The July CPI report generally aligned with expectations, reinforcing the view that inflation is under control, although it does not fully reach the target.
According to the data reported this Tuesday, in July 2025, the consumer price index (CPI) in the U.S. remained stable year-on-year, with an increase of 2.7%, exactly the same as in June and below the forecast of 2.8%.
“The overall figure was contained by the decline in energy and gasoline prices, while services continued to be the main driver of the overall increase,” said Dan Siluk, portfolio manager at Janus Henderson.
He analyzed: “In our opinion, the Fed will ignore the noise of goods inflation and focus on the broad macroeconomic signals: the weakness of the labor market, consumer fatigue, and the risk that the slowdown in growth could turn into deflation in the medium term. This CPI figure does not rule out a cut in September; rather, it supports it in any case.
Now that we know the CPI, attention turns to the PPI report on Thursday and Jackson Hole next week, where we expect further clarification on the evolution of the Fed's reaction function.”
In the same vein, Eduardo Ramos, analyst at VT Markets, stated that the market interprets that the disinflationary trend continues, albeit at a moderate pace. This keeps alive the bets for a rate cut by the Fed in September, likely by 25 bps, and leaves the door open for a second move before the end of the year if employment and activity data continue to weaken.
“In currencies, the dollar ceded slightly against emerging market currencies due to lower inflationary pressure. In the case of Argentina, the data reinforces relief in the parallel and official exchange rates, as a weaker dollar reduces some of the external exchange pressure; however, local economic expectations remain conditioned by internal inflation dynamics and domestic monetary policy. Overall, the sentiment is one of moderate optimism towards risk assets, with a market starting to discount that the Fed could be closer to the end of its restrictive cycle,” summarized Ramos.
According to the data, the core CPI rose by 0.3% month-on-month and 3.1% year-on-year, returning to its highest level since February. However, what matters most for monetary policy is the composition of the figure. The core inflation of goods was more moderate than expected, and there is still no clear evidence that the pass-through of tariffs is gaining momentum. Meanwhile, the core inflation of services was driven by volatile components such as airfares and medical assistance, categories that have a smaller weight in the PCE measure preferred by the Fed.
Housing inflation rose slightly, but rents remain at levels compatible with 2% inflation, suggesting that disinflation in the real estate sector remains intact.