We have had a big surprise in the June consumer price inflation report with both headline and core (ex food and energy) rates rising 0.2% month-on-month rather than the 0.3% expected. In fact, it is even better than that as out to 3 decimal places it is 0.180% for headline and 0.158% for core. This means the annual rate of inflation slows to 3% from 4% for headline CPI while core has dropped to 4.8% from 5.3%. MoM readings of slightly under 0.2% MoM are exactly what we need to see to return annual inflation to 2% over time, so this is great news. However, it needs to happen consistently for the Federal Reserve to ... (full story)