U.S. consumer prices rose slightly in July as gasoline and food prices increased marginally, but a solid gain in shelter costs suggested inflation pressures were stabilizing enough to support expectations of an interest rate hike this year.
U.S. consumer prices rose for a fifth straight month in June as the cost of gasoline and a range of other goods increased, further signs of firming inflation that strengthen the case for an interest rate hike this year.
After six years of a zero-interest-rate-policy (ZIRP), U.S. interest rates are set to go up. But that does not mean a straight shot up. The Fed has not been in a hurry and with inflation low, can manage the next stage of interest rate management.
Having seen numerous fluctuations in the energy markets over the years, many analysts and policy makers have a natural tendency to “look through” the latest drop in oil prices—that is, to treat the impact as transient rather than as signaling long-term changes.