US consumer price inflation came in higher than expected in July, posting 0.6% month-on-month gains for both headline and core CPI versus 0.3% and 0.2% respective consensus expectations. This leaves the respective year-on-year inflation rates at 1% and 1.6%. After yesterday’s firmer-than-anticipated PPI report there was going to be some upside threat, but the scale of the rise in the core measure is quite a surprise. However, we see this more as an an unwinding of the strains caused by Covid-19 shutdowns rather than a signal there is a meaningful pick-up in medium-term price pressures. For example, apparel rose ... (full story)