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US inflation cools as oil surge and Iran tensions revive inflation risks
Softer US CPI and PPI gave the Fed room to stay patient, while renewed US strikes on Iran boosted Brent around $85 and raised the risk of higher energy-driven inflation for the ECB.
Action Forex reports that two consecutive downside inflation surprises in the US have eased pressure on the Federal Reserve, after softer-than-expected CPI and PPI data signaled inflation pressures cooled through the end of the second quarter.
The outlet points to June’s inflation readings, including consumer inflation coming in below expectations and producer prices unexpectedly falling 0.3% in the month, with weakness concentrated in final demand goods, which declined 1.4%, the largest monthly drop since July 2022.
Action Forex says the picture is being complicated by renewed escalation in the Middle East, with Brent holding around $85 after fresh US military action against Iran revived concerns about global energy supplies.
It adds that, with an ECB meeting just days away, policymakers are weighing the risk that higher oil prices could delay a return of inflation toward target, as US Central Command launched another wave of strikes on Iranian military targets aimed at degrading capabilities used to threaten commercial shipping through the Strait of Hormuz.
Latest closeBrent $85.36 ▲2.5%