US inflation unexpectedly stays at 2.7%
US inflation unexpectedly held at 2.7% last month, confounding expectations of an uptick, while a core measure came in higher than expected.
The annual headline rate of inflation was expected to rise slightly to 2.8%.
Stock market futures gained after the figures were released. Spot gold rose by 0.2% to $3,351 an ounce.
However, the core rate of inflation, stripping out volatile food and energy costs, was slightly higher than expected at 3.1%, according to the US Bureau of Labor Statistics.
This complicates the Federal Reserve’s policy decision. It had been expected to lower rates in September, and the data is unlikely to change that expectation.
Key events
Artists including Paloma Faith, Lola Young and The Cure’s lead singer Robert Smith have urged the prime minister to reject future drilling at Rosebank in the North Sea.
In a letter addressed to Sir Keir Starmer and Energy Secretary Ed Miliband, the musicians argued that further development of the oil field north west of Shetland would undermine the UK’s climate commitments and the sustainability of the cultural sector. Estimated to contain up to 300m barrels of oil, Rosebank is the UK’s largest untapped oil field.
The Labour manifesto rules out granting new licences for new fields, but ministers say that does not apply to Rosebank and Shell’s Jackdaw, which already have their licences and are now awaiting environmental consent to begin drilling.
Club World Cup and summer tennis bring in the bets for Entain
A flurry of bets on the football Club World Cup, England’s triumphant European Women’s Championship campaign and summer tennis tournaments helped the UK gambling company Entain to better-than-expected results, helping it brace for looming tax rises in its domestic market.
The owner of brands including Ladbrokes and Coral reported an 11% rise in underlying profits to £583m in the first half of the year, on revenues that rose 3% to nearly £2.6bn.
At BetMGM, Entain’s 50%-owned US joint venture, revenues rose by more than a third. US sports betting continues to grow rapidly following the supreme court’s overturning in 2018 of a decades-old ban on the practice.
But Entain also performed strongly in its home market, with online gambling revenues up 21% in the UK and Ireland.
As temperatures are rising again across the UK, residents have warned about unbearable heat inside some of London’s new-builds.
Experts say many new homes being built in the UK are not designed to withstand extreme summer temperatures.
Stephen Brown, deputy chief North America economist at Capital Economics, said
There was another narrative shift for the Fed to contend with in the July consumer price index data, with tariff effects once again barely perceptible… Given several FOMC participants are now more worried about the labour market outlook, this probably won’t be enough to prevent the Fed from easing policy sooner than we previously expected, but it does support our view that markets are overestimating the degree of loosening to come over the next 18 months.
Ahead of the producer price data tomorrow, our preliminary estimate is for a 0.27% month-on-month rise in the core PCE [personal consumption expenditures] deflator. With most of that coming from services prices rather than goods prices, and given we still have another set of price data and another Employment Report before the Fed’s next meeting, the Fed’s September rate decision is not yet a done deal.
But given the comments from various FOMC speakers since the weak July Employment Report, it would likely take a significantly firmer CPI reading in the next release to prevent a September rate cut.
Richard Flax, chief investment officer at the European fund manager Moneyfarm, said:
The latest inflation release was more or less in line with analyst expectations – with headline inflation marginally below expectations and core inflation marginally higher. Headline inflation came in at 2.7% in July flat from June and slightly lower than expectations. On month-on-month terms, headline inflation rose by 0.2% in July, at a slightly lower growth rate than the 0.3% in the previous month.
Excluding the volatile components of food and energy, core CPI rose 3.1% year on year, slightly higher than expected. Compared to June, core inflation climbed by 0.3% – the biggest monthly gain since the beginning of the year.
Increases in services inflation led the overall index higher, driven by medical and transportation expenses. With inflation above the Feds target and signs of slower economic growth, central bankers have an awkward decision to make at their next meeting in September. Despite that, financial markets imply a high likelihood that the Federal Reserve will cut rates in September and on balance we think this report shouldn’t significantly shift those expectations.
Food prices in the US rose by 2.9% year-on-year last month, the data showed, while energy prices slipped by 1.6%.
So far, there are few signs of trade tariffs pushing up inflation, although core inflation rose to the highest annual rate since February.
US headline consumer inflation was steady in July, rising 2.7% vs the year-ago level, but core CPI (a more reliable measure of the trend) ticked up to 3.1%, the highest since Feb. Still no sign of tariff inflation proper, but core CPI’s uptick could be a sign of things to come: pic.twitter.com/CZcJP0lNKt
— James Picerno (@jpicerno) August 12, 2025
US inflation unexpectedly stays at 2.7%
US inflation unexpectedly held at 2.7% last month, confounding expectations of an uptick, while a core measure came in higher than expected.
The annual headline rate of inflation was expected to rise slightly to 2.8%.
Stock market futures gained after the figures were released. Spot gold rose by 0.2% to $3,351 an ounce.
However, the core rate of inflation, stripping out volatile food and energy costs, was slightly higher than expected at 3.1%, according to the US Bureau of Labor Statistics.
This complicates the Federal Reserve’s policy decision. It had been expected to lower rates in September, and the data is unlikely to change that expectation.
The oil cartel Opec has lifted its forecast for global oil demand next year, as it trimmed its forecast for supply increases from the US and other producers outside the wider Opec+ group, which includes Russia.
World oil demand is estimated to rise by 1.38m barrels per day (bpd) in 2026, the Organisation of the Petroleum Exporting Countries said in its monthly report, up 100,000 bpd from its previous forecast. Its estimate for this year is unchanged.
Rising demand and a drop in supply growth from outside the oil cartel would make it easier for the Opec+ group to pump more oil to claw back market share, after years of cuts aimed at supporting the market and prices.
In July, Opec+ raised oil ouput by 335,000 bpd.
US stock futures are flat ahead of US inflation figures, out in 40 minutes, that could be key to the Federal Reserve’s next interest decision.
Economists are expecting a slight uptick in the headline inflation rate to 2.8% in July, from 2.7% the month before.
The impact of new trade tariffs and uncertainty over future trade policy under Donald Trump have complicated the Fed’s decision on rate cuts.
There is some relief in markets that the US and China have extended their tariff truce for another 90 days until 10 November, staving off triple-digit increases in each other import duties.
Over here, the FTSE 100 index is flat at 9,135 while the German market is down 0.5% and the French bourse has added 0.1%.
The Liberal Democrat MP for Witney, Charlie Maynard, said:
The Liberal Democrats have been warning the government for months that the only option to get a grip on Thames Water at this point is to put it into Special Administration.
Thames Water has been allowed to continue to flounder, while customers are made to pay sky high interest payments on the company’s billions of pounds of debt.
Special Administration will allow debt to be written down so more money can be spent on cleaning up the sewage in our lakes and rivers. The final whistle needs to be blown on Thames Water and we need a new, capable regulator in place as soon as possible.
Here is our full story on Thames Water:
UK ministers have appointed insolvency advisers to make contingency plans for the potential collapse of Thames Water.
The company, which supplies 16 million customers, has been racing to pull together a deal to avoid financial collapse.
The appointment indicates that FTI is the frontrunner to act as administrator if the government enacted an SAR, although a court would ultimately approve such a step.
The government has been trying to avoid such an outcome, with the Treasury threatening that a potential £4bn bill from the SAR could be forced on to Steve Reed’s environment department. This process would ensure that the taps stayed on for customers but would heap immediate costs on to the government.
However, the government’s Water (Special Measures) Act contains a provision for SAR costs to be recouped from customer bills further down the line.
Gold prices flat; Swiss metals group wants formal US commitment on gold tariffs
In financial markets, spot gold prices are flat after dropping nearly 1.6% on Monday, when Donald Trump announced there would be no US tariffs on imported gold bars.
“Gold will not be Tariffed!” the US president said on his social media account, without giving further details.
Spot edged up to $3,352 an ounce earlier. On Friday, gold futures hit a record high after a ruling on the US customs and border protection service’s website suggested that one-kilo bars of gold could be subject to new US import tariffs. This would have been especially damaging for Switzerland, a major refining and transit hub for gold. Trump recently imposed a 39% tariff on Swiss exports to the US.
The Swiss stock exchange is also flat today.
But, the head of the Swiss precious metals association ASFCMP said only a formal decision will provide certainty. Its president Christoph Wild said:
President Trump’s statement is an encouraging signal for trade stability.
However, only a formal and binding decision will provide the certainty the gold sector and its partners require.
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