Credit Agricole: Next Week, Inflation Takes Centre Stage Ahead of September FOMC - FJElite

Next week’s focus is firmly on inflation, with CPI on Wednesday and PPI on Thursday, alongside retail sales, consumer sentiment, existing home sales and a small number of Fed speakers. July CPI is expected to sit between June’s softer print and the hotter spring readings, with headline inflation seen at 0.2% MoM and 3.4% YoY, while core is forecast at 0.3% MoM and 2.5% YoY.

The next couple of monthly core inflation prints are likely to be key for the Fed’s September decision, and a July result in line with expectations would probably not settle the hold-versus-hike debate, especially with one more CPI report due before the meeting. PPI is also expected to cool from spring levels, while retail sales are seen rising 0.2% MoM and 0.4% excluding autos and gas, keeping consumption on track for another solid quarter.