Where Will July's Inflation Be?

With July 2022 now in the history books, we must now begin to ponder what the official level of consumer price inflation per the CPI be for the month.

One indicator is the CPI Nowcast from the Cleveland Federal Reserve, which currently projects July CPI inflation at 8.82%, a rise of 0.15% from the final nowcast estimate for June. Applying that rise to official CPI inflation puts July’s inflation at approximately 9.25%.

Note from the chart that the nowcast has consistently underestimated what the official CPI inflation rate will be in each month so far this year, with the nowcast being off the mark by roughly 0.5% in June. Applying the same error correction to July’s nowcast also yields 9.25%.

If the nowcast trend holds up, peak inflation is not yet arrived.