Slowing US inflation data lowers chances of rate rise

The news: Annual inflation in the US increased at the slowest pace sine March 2021 and came in slightly below what analysts were expecting. This is supporting the case for the Federal Reserve to keep rates on hold next month.

The numbers: US inflation increased 0.2% in July on a seasonally adjusted basis, equal to the June inflation increase. The all items index increased 3.2% for the 12 months to July, up from 3% in June. The biggest contributor to the monthly increase was housing, which counted for over 90% of the rise. Core inflation was also 0.2% over the month, up 4.7% annually, which marked a slowing over June.

The context: The US has one more inflation read due, on September 13, ahead of the Federal Reserve's September 19-20 policy meeting. Ahead of the data being released in the US, San Francisco Fed President Mary Daly said it would not be a single data point that "says victory is ours. There's still more work to do." The Reserve Bank of Australia meets on September 5 to determine the next rate change. It will be RBA governor Philip Lowe's last decision before he hands over to Michele Bullock mid-month.