Inflation eased to 5.4% in the past year, as consumer prices declined 0.1% in August and marked the first decline in nearly two years, according to a Labor Department report released Tuesday.
With inflation’s decline, some economists said the path was paved for a potential interest rate cut after the Federal Reserve’s monthly meeting on Tuesday.
“This frees the Fed’s hands to cut rates, if they deem that to be the right move later today,” said Mark Vitner, senior economist at Wachovia.
“If inflation continued to accelerate, it would make it very difficult for the Fed to cut interest rates,” said Vitner. “But now, if they need to cut interest rates, they will do it.”
Continue reading Inflation eases to 5.4% as consumer prices fall 0.1%
The annual inflation rate climbed to 5.6% in July — the fastest growing rate in 17 years, according to Labor Department figures released Thursday.
Consumer prices jumped 0.8% in July, nearly double the level economists expected. It follows June’s 1.1% increase.
The biggest culprit in inflation’s increase was energy costs, which jumped by 4% on a monthly basis and 29.3% annually. On a somewhat optimistic note, the latest July figures include data collected only from the first three weeks, and do not account for the most recent commodity price decreases, like those seen in oil and gas.
“Energy prices do seem to be coming down a bit. So I’m hopeful that going forward we won’t see as much of an increase,” said UCLA economist Lee Ohanian. “That decline will translate into lower gasoline prices and lower prices across the board.”
However, the core CPI, which excludes volatile food and energy items, still experienced a 0.3% and 2.5% annual increase. Economists expected a 0.2% increase.
Continue reading Inflation fastest in 17 years, rate climbs 5.6%