Wednesday’s release of the consumer-price index report for July contained enough downside surprises to give stock investors hope the worst of inflation may be behind. Yet an undercurrent of worry remained at big-name firms like Pimco and BlackRock Inc., the world’s largest asset manager.According to Pimco economists Tiffany Wilding and Allison Boxer, the details of the report were “firmer” than what was implied by the annual headline CPI rate — which fell to 8.5% for July from 9.1% in June and came in below the expectations of economists and inflation-derivatives traders. If food and energy prices continue to ease, June will likely prove to be the peak in year-over-year headline inflation, Wilding and Boxer wrote in a note. But the annual core measure, which strips out food and energy, “will likely reaccelerate in August, and isn’t likely to peak until September.” The so-called core reading, which excludes volatile items, matters to many in financial markets because it’s supposed to represent a true underlying read on inflation — though there’s some debate over which time frame of the core gauge is most relevant. The core gauge came in unchanged at 5.9% for the 12 months that ended in July, and at 0.3% on a month-over-month basis, down from 0.7% in June. Wilding and Boxer point out that the categories which drove July’s weakness in core — airfares and hotels — “tend to be more volatile, whereas the stickier components (rents/Owners-Equivalent-Rent) remained firm.” In addition, the economists said, other core measures of inflation from the Cleveland Fed, New York Fed and Atlanta Fed “have all accelerated” — with the depth and breadth of inflationary pressures across items spreading out. Meanwhile, wage inflation …
