US Inflation Monitor: CPI Preview: Core normalizes after June's downward surprise

Research evidence excerpt

M

Idea

August 5, 2026 09:26 PM GMT

Morgan Stanley & Co. LLC

US Inflation Monitor | North America

Diego Anzoategui

Economist

CPI Preview: Core normalizes

after June's downward surprise

Michael T Gapen

Chief US Economist

Sam D Coffin

Economist

We forecast July Core CPI at 0.24% m/m, 2.5% y/y (vs. -0.02% in

June). Core services should rebound toward their underlying

trend, while core goods firm temporarily despite a fading tariff

push. We expect headline CPI to rise 0.10% m/m (3.4% y/y), with

the NSA index at 334.029.

Arunima Sinha

Global Economist

Heather Berger

Economist

Lingdi Xu

Economist

Core CPI inflation and contributions

Exhibit 1:

0.60

Contributions to Core CPI (m/m, %)

MS F'cst

0.50

0.40

0.30

0.38

0.31

0.30

0.23

0.22

0.20

0.09

0.10

0.22

0.24

0.21

0.20

0.09

0.00

-0.02

-0.10

-0.20

Rents

Core services ex-rents

Vehicles

Other core goods

Core

-0.30

Jul-25

Aug-25 Sep-25

Oct-25

Nov-25 Dec-25 Jan-26

Feb-26 Mar-26

Apr-26 May-26 Jun-26

Jul-26

Source: Bureau of Labor Statistics, Morgan Stanley Research forecasts. Oct-25 and Nov-25 m/m rates were calculated interpolating

the September-November 2-month change.