Category Archives: Inflation

Fed seen lowering rates toward zero without inflation worries

Greatly reduced inflation pressures and a desire to spark some life into the economy has almost everyone expecting the Federal Reserve to cut its benchmark overnight interest rate from 1% to 0.50%, marking the lowest level on records dating to July 1954.

Plummeting energy prices have taken the sting out of inflation since crude prices tumbled off their record peak near $147 per barrel in July — also when inflation was at its highest for the year. New York crude-oil for January delivery settled to $46.28 a barrel, falling $1.70 on Friday.

Consumer prices dropped a record 1% in October. The Labor Department reports on Tuesday the November CPI, which is the most watched government inflation barometer. Economists expect another record decline to 1.4%. Add in Friday’s report by the government showing producer prices fell to 2.2% and the Fed has an enormous green light to lower rates with little regard for inflation. Continue reading Fed seen lowering rates toward zero without inflation worries

Producer prices drop 2.2% in November

Producer prices fell sharply in November as energy prices plunged for the fourth consecutive month, the Labor Department reported Friday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, fell steeper than expected to 2.2%. Economists had pegged a predictive 2.0% rise. The index registered its biggest monthly decline ever in October, falling a record 2.8%.

Plummeting energy prices again led the way in dragging prices down. The energy index fell 11.2% after a 12.8% drop in the previous month which set a 22-year record. Crude goods declined 12.5% following a 18.6% drop in October.

The consecutive declines further highlights free-falling crude-oil prices, which closed Thursday in New York at $47.98 a barrel — a far distance from its record highs near $147 per barrel in July when inflation peaked.

Continue reading Producer prices drop 2.2% in November

Consumer prices fall record 1%, inflation drops to 3.7%

Consumer prices declined in October by a record level, the Labor Department reported Wednesday. The Consumer Price Index (CPI), which is the most watched government inflation barometer, retreated to 3.7% during the previous twelve months and follows a decline of 4.7% in September.

On a monthly basis, the index fell 1% to mark the largest one month decrease since publication of seasonally adjusted changes began in February 1947. Economists were expecting a 0.9% decline.

"We are moving into an environment where prices are falling across the board," David Resler, chief economist at Nomura Securities International Inc. in New York, said in an interview with Bloomberg Television. "That is going to continue. Deflation is spreading across the economy."

Continue reading Consumer prices fall record 1%, inflation drops to 3.7%

Inflation rates and figures updated for November 2008

The US Inflation Calculator website has been updated with the latest Bureau of Labor Statistics (BLS) data released Wednesday, November 19. The newest figures indicate that October’s annual rate of inflation declined to 3.7%. That compares to 4.9% in September and 5.4% in August. On a monthly basis, the Consumer Price Index (CPI) declined 1.0 percent. September was virtually unchanged while August declined 0.1%.

The Inflation Calculator has been updated to use the latest figures for calculation, as have the following pages:

Consumer Price Index Data from 1913 to 2008

Current Inflation Rates: 1999-2008

Historical Inflation Rates: 1914-2008

Annual Averages for Rate of Inflation

An in depth look at the released Labor Department data follows at Consumer prices fall record 1%, inflation drops to 3.7%.

Producer prices set record drop of 2.8% in October

Producer prices plunged in October for the third straight month and by a level never before on record, the Labor Department reported Tuesday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, plummeted 2.8%. Forecasters were expecting a 1.9% reduction, which would have itself broke the last record one-month drop of 1.6% in October 2001, or right after the September 11 terrorist attacks.

Similar to September’s 0.4 % fall, diving energy prices were the key to October’s PPI decline. Energy prices plunged 12.8% in the month after falling 2.9% in September. That marks the biggest one-month drop since July 1986.

Continue reading Producer prices set record drop of 2.8% in October

Fed cuts interest rates to 1 percent, expects inflation to moderate

The Federal Reserve lowered its federal funds rate, the benchmark overnight lending rate at which banks lend to one another, by 50 basis points to 1 percent at Wednesday’s end of month scheduled meeting.

The latest rate is the lowest since 2004 and joins a new round of global cuts. China and Norway also cut rates on Wednesday, and other countries are expected to follow suite in an attempt to change the economic downturn and fight the ongoing crisis in the credit markets.

The Feds newest reduction follows on the heels of its emergency 1/2 percent interest rate cut on October 8 when world central banks first joined in their coordinated efforts to try to stabilize financial markets and ease out of the global credit crunch.

Today’s move was widely expected, although a minority of analysts suggested the Fed could cut rates by three-quarters of a percentage point to 0.75 percent, marking a never before seen low. Immediately following the announcement, U.S. stocks inched lower.

The announcement was made by the Federal Open Market Committee (FOMC), who released the following statement:

Continue reading Fed cuts interest rates to 1 percent, expects inflation to moderate

Consumer prices flat, inflation eases to 4.9% in September

Consumers got a respite on inflation in September, the Labor Department reported Thursday. The Consumer Price Index (CPI), which is the most watched government inflation barometer, retreated to 4.9% during the previous twelve months.

While overall U.S. consumer prices remained virtually unchanged, food prices increased and energy prices tumbled. September’s 30-day standstill follows an August monthly drop of 0.1% and an annual inflation rate of 5.4%.

Falling energy prices combined with a slowing economy eased consumer prices those two months. Inflation began its most ugly uptrend in April. It peaked to a 17-year high of 5.6 percent in July, during a time consumer and energy prices were at their highest — oil reached a record near $147 per barrel.

"Consumer price inflation has gone dormant, as the recent abrupt slowdown in world economic growth has led to sharp declines in energy costs, while weak domestic demand is putting downward pressure on retail prices in many key markets," wrote Dr. Brian Bethune, chief U.S. financial economist for Global Insight.

Oil prices tumbled Wednesday, closing on Nymex under $75 per barrel for the first time in more than one year. With less costly oil, weaker import prices and falling producer prices, inflation in October is expected to ease further.

Continue reading Consumer prices flat, inflation eases to 4.9% in September

Inflation rates and figures updated for October 2008

The US Inflation Calculator website has been updated with the latest Bureau of Labor Statistics (BLS) data released Thursday, October 16. The newest figures indicate consumer prices (inflation) rose 4.9 in September from a year ago, compared to 5.4% in August. On a monthly basis, the Consumer Price Index (CPI) was virtually unchanged following a 0.1% decrease in August.

The Inflation Calculator has been updated to use the latest figures for calculation, as has the following pages:

Consumer Price Index Data from 1913 to 2008

Current Inflation Rates: 1999-2008

Historical Inflation Rates: 1914-2008

Annual Averages for Rate of Inflation

An in depth look at the released Labor Department data may be read via the article Consumer prices flat, inflation eases to 4.9% in September.

Producer prices fall for second straight month

Producer prices fell in September with lower energy prices, and dropped for the second consecutive month, the Labor Department reported Wednesday.

The Producer Price Index (PPI), which measures prices at the factory door and inflation pressures before they reach the consumer, decreased in September to 0.4%. The drop was in line with analysts’ expectations. September’s decline follows a 0.9% drop in August and a 1.2% increase in July — a month that marked a 27-year high.

Falling energy prices was the key to easing price pressures as highlighted by the stark contrast of Tuesday’s Nymex crude-oil price of $78.63 per barrel compared to a record high near $147 per barrel in July. Energy prices fell 2.9 percent in September after tumbling 4.6 percent in August — a month that marked the biggest drop in nearly two years.

Continue reading Producer prices fall for second straight month

US Federal Reserve and world central banks cut interest rates

Inflation worries were thrown aside as interest rates were cut on Wednesday in a synchronized multi-country response to try to stabilize world financial markets and ease out of the global credit crunch.

Less than a day after Fed chairman Ben Bernanke hinted a rate cut could be in the works, an unscheduled emergency announcement was made by the Federal Open Market Committee (FOMC) to lower its target for the benchmark federal funds rate 50 basis points to 1-1/2 percent.  In a coordinated effort, the European Central Bank, China, Britain, Canada, Sweden and Switzerland also cut rates.

The following was released in a joint statement by the central banks:

Continue reading US Federal Reserve and world central banks cut interest rates