July CPI Cools to 3.4% Headline, 2.5% Core — Both Down 0.1pp From June

BLS reported the Consumer Price Index rose a seasonally adjusted 0.1% in July, with the annual headline rate easing to 3.4% from June's 3.5%. Core CPI (ex-food and energy) rose 0.2% for the month, with the annual core rate cooling to 2.5% from 2.6%. The energy index fell 1.5% on the month even as oil prices had spiked earlier in the window, while shelter — up 0.1% — accounted for roughly two-thirds of the headline increase; food also rose 0.1%. The report matched analyst expectations and reinforced the disinflation narrative that had been complicated by the July 23 Hormuz/Red Sea oil shock, landing five weeks before the September 16-17 FOMC meeting and taking some urgency off the hawkish rate-hike case that had briefly pushed September hike odds above 80% in late July.