US inflation slows to 2.9pc in July, 3-year low
US inflation slowed in July to the lowest since March 2021, a sign of decelerating pricing pressure that point to a likely cut in borrowing costs by the Federal Reserve next month.
The consumer price index (CPI) slowed to an annual 2.9pc in July from 3pc in June and 3.3pc in May, the Bureau of Labor Statistics reported today. So-called core inflation, which strips out volatile food and energy prices, rose by 3.2pc in July, the smallest gain since April 2021.
After the report, the CME's FedWatch tool signaled a 58.5pc probability that the Fed will cut its target rate by a quarter point in September from 47pc odds Wednesday. Probabilities of a half point cut fell to 41.5pc from 53pc the prior day, suggesting underlying signs of stubborn inflation in the details of today's report.
The energy index rose by an annual 1.1pc in July, accelerating from 1pc in June, while the gasoline index contracted by 2.2pc in July compared with a 2.5pc contraction in June. Energy services rose by an annual 4.2pc, slowing from 4.3pc the prior month.
Food costs rose by 2.2pc in July, matching the prior month. Shelter rose by 5.1pc in July, easing from 5.2pc the prior month. Transportation services rose by 8.8pc in July following a 9.4pc gain in June.
After falling to 3.1pc in January, inflation had reaccelerated to as high as 3.5pc in March as job growth and other economic data had come in stronger than expected. That prompted the Federal Reserve to hold off on widely expected rate cuts after hiking its target rate to a 23-year high of 5.25-5.5pc in July 2023 and holding it there since, saying it needed "greater confidence" that inflation was easing to its 2pc target.
The Fed, in its June policy meeting, penciled in one likely quarter-point cut this year, down from three signaled in March. But a weaker than expected employment report for July early this month had prompted an equity market downdraft last week on recession concerns and fears the Fed had been too slow to begin cutting rates.
CPI rose by a seasonally adjusted 0.2pc in July after a 0.1pc gain in June. Core CPI was up by 0.2pc for the month after a monthly gain of 0.1pc in June.
By Bob Willis
Related news posts
EU needs to shake up energy markets: Draghi report
EU needs to shake up energy markets: Draghi report
Brussels, 9 September (Argus) — The EU should take measures in energy markets that are "dominated by vested interests", including antitrust investigations, a report from former European Central Bank president Mario Draghi found today. The call came as part of Draghi's report into the EU's future competitiveness, which was requested last year by European Commission president Ursula von der Leyen. It identified cost-efficient decarbonisation as a major challenge, and said the bloc must focus on accelerated innovation and growth and overcome geopolitical dependence and vulnerability. The report, which runs to more than 300 pages, says the EU should carry out antitrust investigation into electricity and gas markets, and into energy imports, to deter "anti-competitive behaviour and tacit collusion" among companies, it said. There should be a common maximum level of energy surcharges in the EU covering all energy taxes, levies and network charges, the report found. Draghi — a former Italian prime minister — put forward specific proposals for energy markets including the development of an EU-level gas strategy, progressively moving away from spot-linked sourcing and increasing EU bargaining power, and reinforcing long-term contracts. He argues for decoupling inframarginal generation from natural gas prices through long-term power purchasing agreements (PPAs) and contracts for difference (CfDs). Draghi wants compensation mechanisms for offering flexibility on markets as well as joint purchasing of energy in addition to demand aggregation. Other ideas tackle speculative behaviour via position limits and dynamic caps as well as an EU trading rule book with "an obligation to trade in the EU". A further proposal is a review of a so-called "ancillary activities" exemption, under EU financial regulation, whereby non-financials, typically energy, firms can trade energy derivatives more freely without being authorised as investment companies. Speaking alongside Draghi today, von der Leyen noted the need to shift away from fossil fuels and support industry through decarbonisation, also by bringing down energy prices. Draghi's report noted the difficulty of cutting emissions in hard-to-abate industries, as well as in the transport sector. Planning is crucial, the report noted. For industry, it recommended "a mixed strategy that combines different policy tools and approaches for different industries", importing some "necessary technology" while ensuring the bloc retains some manufacturing capacity. It called for "a joint decarbonisation and competitiveness plan where all policies are aligned behind the EU's objectives." Von der Leyen did not react to specific proposals put forward by Draghi, and she is not obligated to act on the report's proposals. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US Gulf producers curtailing operations on storm threat
US Gulf producers curtailing operations on storm threat
New York, 9 September (Argus) — Oil companies started to halt offshore operations in the US Gulf of Mexico ahead of an expected hurricane strike later this week. Shell said it paused some drilling operations at the Perdido and Whale platforms — located about 190 miles south of Houston — as a precaution as tropical storm Francine threatened to develop into a hurricane as it moves north from the Bay of Campeche toward the Texas and Louisiana coasts. ExxonMobil said all staff had been transported off the Hoover platform, located about 200 miles south of Houston, and operations shut-in. And Chevron said it is evacuating non-essential workers from its Anchor, Big Foot, Jack/St. Malo and Tahiti facilities, though production from company-operated assets remains at normal levels. Those facilities are located about 280 miles south of New Orleans. "We continue to supply our customers at our onshore facilities, where we are following our storm preparedness procedures and paying close attention to the forecast and track of the storm," Chevron said. Francine, which formed off the east coast of Mexico over the weekend, is forecast to become a hurricane as it moves north toward the Texas coast and northwestern Gulf, according to the National Hurricane Center. Current forecasts have it coming ashore somewhere between the Texas/Louisiana border and New Orleans Wednesday evening. A hurricane watch is in place for parts of southern Louisiana as Francine is expected to bring heavy rainfall and the risk of flash flooding across the region. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Venezuelan vote ends in opposition leader's exile
Venezuelan vote ends in opposition leader's exile
Caracas, 9 September (Argus) — Venezuelan opposition leader Edmundo Gonzalez landed in Spain on Sunday after an arrest warrant accused him of terrorism as President Nicolas Maduro continues to crack down on dissent despite international condemnation. Gonzalez fled to Spain after several days of shuttling between foreign embassies in Caracas "to save his liberty, integrity and life," Maria Corina Machado, Gonzalez's ally and the key opposition figure blocked by Maduro from running in the election, said on social media. "My departure from Caracas was surrounded by episodes of pressure, coercion and threats in order to not allow me to leave," Gonzalez said in an audio post to his followers. "I am confident that in the near future we will continue the struggle to achieve freedom and recover democracy in Venezuela." The US and other countries have not recognized official election results from 28 July and backed the opposition coalition's claim that Gonzalez likely was the winner. But Washington has refrained from taking any action, including enforcing an even stricter regime of oil and other sanctions, to force Maduro to cede power. "The United States strongly condemns Maduro's decision to use repression and intimidation to cling to power by brute force rather than acknowledge his defeat at the polls," secretary of state Antony Blinken said. Gonzalez's departure highlighted pessimism over the possibility of a negotiated departure for Maduro, who claims that he won a third term. "Today is a sad day for democracy," EU foreign affairs representative Josep Borrell said, saying that removing Gonzalez from Venezuela was the only solution for now. Oil minister and vice-president Delcy Rodriguez confirmed Gonzalez's departure late on 7 September, labeling Gonzalez an "opposition citizen" who was granted safe passage after requesting political asylum. In the days after the election, 23 demonstrators and one national guard member were killed, according to figures from the Organization of American States. Maduro boasted of arresting 2,500 "terrorists", but human rights non-governmental organizations say the detainees are demonstrators, election workers, politicians and journalists. According to the human-rights group Foro Penal, more than 1,700 are still in jail. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Methanex to acquire OCI’s methanol business for $2bn
Methanex to acquire OCI’s methanol business for $2bn
Houston, 9 September (Argus) — Methanol producer Methanex announced Sunday that it will acquire OCI's international methanol business for $2.05bn. As part of the transaction, Methanex will acquire four primary assets, including a 910,000 t/yr methanol facility and 340,000 t/yr ammonia facility in Beaumont, Texas. Methanex will acquire OCI's 50pc interest in the 1.7m t/yr Natgasoline methanol plant in Beaumont. The acquisition of Natgasoline is subject to a legal proceeding between OCI and Proman, the other 50pc holder in Natgasoline, over certain shareholder rights. If the dispute is not resolved within a certain period, Methanex has the option to exclude the purchase of the Natgasoline joint venture and proceed with the rest of the transaction. The transaction also includes OCI HyFuels, a producer of green methanol products such as biomethanol and bio-MTBE, and trading and distribution capabilities for renewable natural gas (RNG) and ethanol. Additionally, Methanex will acquire an idled 1m t/yr methanol facility in Delfzijl, Netherlands. The purchase price includes $1.15 billion in cash, the issuance of 9.9 million shares of Methanex valued at $450 million and the assumption of about $450 million in debt and leases. The acquisition of fertilizer producer OCI began over a year ago, according to OCI officials. "We identified Methanex as the natural owner of OCI Methanol at the outset of our strategic process, which we initiated in the spring of 2023," OCI executive chairman Nassef Sawiris said. This acquisition moves Methanex, primarily a methanol maker, into the ammonia sector. "From an operating perspective, we have a shared culture of safety and operational excellence, and we expect the OCI team will help us build new skills in ammonia while enhancing our capabilities in the evolving business of low carbon methanol production and marketing," Methanex CEO Rich Sumner said. The deal is expected to close in the first half of 2025. The transaction has been approved by the boards of directors of the two companies and is now awaiting certain regulatory approvals and other closing conditions. The transaction is also subject to approval by a simple majority of the shareholders of OCI. The largest shareholder of OCI, has signed an agreement to vote for the transaction. By Steven McGinn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more