The Cleveland Federal Reserve’s inflation nowcast echoes the Wall Street consensus projection for July’s CPI print due out tomorrow: Headline inflation of 3.4% year on year, core inflation of 2.5% year on year.

The Cleveland Fed nowcast also puts month on month headline inflation at just below 0.1%, with core inflation significantly higher at .2%

That implies energy price deflation, which seems counterintuitive, given the number of energy price increases recorded for July:

• Brent Crude: ~24%

• West Texas Intermediate: ~20%

• Diesel (NY Harbor Contract): 32%

• RBOB Gasoline: 15%

• Gas price at the pump: 6%

• Diesel price at the pump: 13%

If these price hikes do not materialize in the July CPI, will they still be an influence on the July Producer Price Index report due out on Thursday?

Energy prices have risen and are continuing to rise. Those increases will impact the inflation numbers eventually, one way or another.