Cooling down

Inflation in the US is cooling down. CPI for June came in at 3%, lower-than-expected, a two-year low and one-third of the level it reached a year ago. Core inflation, excluding volatile food & energyprices, is also coming down. Without wanting to cry victory too soon as there is a positive ‘base effect’ in these figures, disinflationary forces clearly start to kick in for example from lower energy prices, softening economic data to a slowing housing market. As we commented before, the Fed arrives towards the end of its aggressive monetary tightening cycle.