Overview:

• Inflation has slowed recently even allowing for ‘one-offs’.
• However, producer price inflation and wages growth do not show similar weakness, and the currency drag is fading.
• History warns against simply extrapolating recent inflation numbers into the future.
• However, we have made a downward adjustment to our inflation forecasts, which suggests there is downside risk to our current view of one more Fed rate hike at the end of 2017 and three more in 2018.

For further details please see the attached document

• US Update: Inflation watch June 2017 (PDF, 139kb)