US consumer prices rose in line with expectations last month, according to the most important CPI release since… well, since the one before it.

The as-expected prints for July may help allay concerns that the prior month’s report was a false dawn.

The June figures were widely heralded as the first convincing evidence that disinflation has finally begun in earnest. If nothing else, Thursday’s release didn’t argue against that narrative.

Core prices rose 0.2% MoM, and 4.7% YoY, matching estimates. Unrounded, the monthly core print was 0.16%. That makes two months in a row of 0.2% prints that were a few ticks from rounding down, rather than up.

The headline gauge likewise rose 0.2% from June. The YoY read on the all-items gauge was a touch lower than expected, at 3.2%. It may drift up over the next month or two, but no one is especially concerned about that.

What matters now are the core readings, and particularly various measures of services price growth excluding housing components.

Although some key underlying indexes were hotter versus June, nothing stuck out as especially concerning. The food at home gauge rose 0.3%, the largest increase since February, but the 12-month rate of grocery price inflation is now 3.6%. It peaked in the double-digits.

Electricity prices fell from June, and the YoY reading there is now just 3%.

For a time, Americans were experiencing double-digit price growth for both their grocery and electric bills. Those rates may sport two-handles soon.

The shelter gauge rose 0.4% (MoM) for a second month. These readings are generally expected to stay relatively subdued going forward. The Fed is counting on shelter disinflation.

Although home prices have begun to rise again on both a monthly and 12-month basis, there’s still a lot of lagged catching down to do if the figure above has any explanatory power at all.

New vehicle prices fell a third month in four, and true to the delayed reaction dynamic vis-à-vis months of falling wholesale prices, the used vehicle gauge dropped 1.3% from June, and was down 5.6% from July of 2022.

Apparel prices were flat, transportation service costs rose 0.3% and medical care services posted the largest monthly decline since March.

The two CPI-derived “supercore” measures (services ex-shelter and services ex-OER and rent) printed 0.22% and 0.195%, respectively. Those are both warmer than June, but not nearly hot enough to dispel the disinflation narrative.

This release probably takes a September Fed hike off the table barring a blockbuster August jobs report. That’s especially true given the Fed would prefer a quarterly pace of hikes (assuming there’s another hike coming), even as the Committee’s hawks seemingly insisted that Jerome Powell classify the September meeting as live for the purposes of media questions during last month’s post-FOMC press conference.

Bottom line: July was another relatively cool month for inflation in the US. Even as it was the hottest month for the planet in the history of human civilization+.