US inflation shows signs of slowing down as CPI below expectations at 8.5%

According to data released on Wednesday, inflation in the US during July came in at 8.5%.

Wednesday’s Consumer Price Inflation (CPI) figures show inflation remained unchanged at 0.0% since June, however, it has increased 8.5% year-on-year. Today's figures come in below expectations and represent the first drop since April, which may well support the "peak inflation" narrative.

source: tradingeconomics.com

Analysts at Deutsche Bank said ahead of time, "we expect the headline year-on-year rate to finally dip after energy prices have fallen of late. We are looking for 8.8% (from 9.1%) with consensus a tenth lower."

Fidelity Digital Assets director of research Chris Kuiper told The Block ahead of time that a "lower-than-expected inflation print or falling inflation will likely be viewed as positive for digital assets as it gives the Federal Reserve and other central banks a reason to pause or even reverse tightening the money supply."

Bitcoin and ether saw major price swings last month as inflation in the US reached a 40-year high, jumping by 1.3% in June, an increase of 9.1% year-on-year – following today's news cryptocurrencies rallied. 

Bitcoin hurtled towards $24,000 following the report, trading just short of this figure at $23,970 at the time of writing. Meanwhile, ether jumped over 4% in the past hour trading hands at $1,804.

Kuiper expects macroeconomic conditions to continue to drive digital asset sentiment in the short-to-medium term, before going on to say "we think scarce digital assets like bitcoin will continue to provide an attractive alternative in a world of high leverage and financial repression in the longer term."