The consumer price index rose 0.1% in July, bringing the annual rate to 3.4%, in line with market expectations. Core inflation stands at 2.5% annually, with two consecutive months of favorable readings feeding hopes of an inflation retreat. Traders have cut to 38% the odds of a rate hike at the Fed’s September FOMC meeting, down from about 70% a month ago. Middle East tensions and a 10% rise in crude oil over the past week pose upside risks for coming months. The shelter index, which represents about one-third of the CPI weighting, rose just 0.1% over the past two months.
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