Inflation Is Still A Major Problem, Ignore The June Data

The disinflationary effect of falling energy prices in June has already reversed in July, with oil up nearly 20% and likely to continue rising. Inflation is driven by longer-term structural, persistent forces, like deglobalization and demographics, as well as the Trump policy mix. Thus, inflation has not peaked, and the Fed is likely to remain hawkish, which adds to the worries for the stock market, already concerned about the AI bubble burst. The CPI inflation for June fell by -0.4% for all items, bringing the annual CPI inflation down from 4.2% to 3.5%. The main reason? Gasoline prices fell by 9.5% MoM, and electricity prices also fell.