Tag Archives: Rates

US Consumer prices unchanged, biggest annual inflation drop since 1950

U.S. consumer prices remained unchanged in July but annual inflation registered its largest decline since 1950, the Labor Department reported Friday.

The latest data helped ease concerns of rising inflation due to government spending and the Federal Reserves monetary policy of injecting cash into the US economy.

"It [inflation] could be a very large long-run problem," Mickey Levy, Bank of America, chief economist, was quoted on NYTimes.com. "But in the near-term, it’s not a problem at all."

The Consumer Price Index, which measures inflation pressures at the consumer level, remained unchanged in July due largely to Continue reading US Consumer prices unchanged, biggest annual inflation drop since 1950

Consumer prices up 0.7% in June, inflation falls 1.4% in year

U.S. consumer prices jumped in June as higher energy costs — gasoline prices in particular — drove up the cost of living, although year-over-year inflation fell by the largest amount since Jan. 1950.

The Consumer Price Index, which measures inflation pressures at the consumer level, rose 0.7% in June following a 0.1% increase in May, the Labor Department reported Wednesday. At the same time, inflation fell 1.4% compared to a year ago when energy prices were at their height. The annual decline is the biggest in 59 years.

"It’s a bit of a bogus comparison, because we’re comparing gas prices at nearly their astronomical peak last year," Stuart Hoffman, economist at PNC, was quoted on CNNMoney.com and referred to the the-record high gasoline prices of over $4 per gallon in July 2008.

Excluding volatile food and energy prices, the core CPI rose 0.2% in June after a 0.1% increase in May. Continue reading Consumer prices up 0.7% in June, inflation falls 1.4% in year

Producer prices surge 1.8% in June, led by energy costs

U.S. producer prices jumped to double the level expected, as surging energy prices weighed in heavily for the month.

The Producer Price Index (PPI) rose by 1.8% in June, the biggest increase since November 2007, according to a Labor Department report released Tuesday. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

The June PPI increase follows a 0.2% rise in May when energy costs had increased 2.9%. While gasoline prices have declined in recent weeks and in particular during early July, they are not reflected in June numbers, which shows energy prices climbed 6.6% — with heating oil costs rising 15.4% and gasoline prices soaring 18.5%.

"Sharply higher gasoline prices are the primary culprit behind the jump in the headline number," Tom Porcelli, a senior economist at RBC Capital Markets in New York, was quoted on Bloomberg. For other items, he said, "the risk is skewed toward prices remaining soft over the near term."

Continue reading Producer prices surge 1.8% in June, led by energy costs

Inflation drops 1.3% in year; most in six decades, consumer prices rise 0.1%

Consumer prices crawled weakly higher in May and for the first time in three months while inflation plunged 1.3% in the past year to mark the largest decline since April 1950, the government reported Wednesday.

The Labor Department said the Consumer Price Index, which measures inflation pressures at the consumer level, inched 0.1% higher in May following a flat reading in April. The increase was less than generally expected, but many analyst are expecting more of the same tame readings in coming months.

"Inflation may be coming, but it’s not here yet and likely won’t be for some time," Richard Moody, chief economist at Forward Capital, was quoted on the AP.

"Inflation is not an issue,"Michael Moran, chief economist at Daiwa Securities America Inc. in New York, was quoted on Bloomberg. "There are huge amounts of slack in the economy and demand is quite soft, so it’s difficult to see how inflation can pick up for the balance of the year."

May’s higher energy costs — most specifically gasoline prices at the pump — were offset by lower food prices. Continue reading Inflation drops 1.3% in year; most in six decades, consumer prices rise 0.1%

Producer prices inch 0.2% higher on energy prices, inflation in check

U.S. producer prices picked up in May, but they were less than expected despite increasing costs at the pump.

The Producer Price Index (PPI) rose by 0.2% last month, according to a report on Tuesday released by the Labor Department. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

"This clearly suggests there’s no inflation yet," Anika Khan, an economist at Wachovia Corp. in Charlotte, North Carolina, was quoted on Bloomberg. Price gains are "a gasoline story… companies can’t pass on the prices because the consumer is not in a situation to pay right now."

The PPI has fallen 5.0% in the past twelve months and is the biggest year-over-year decline since 1949. Continue reading Producer prices inch 0.2% higher on energy prices, inflation in check

Annual inflation at -0.7%, sharpest drop in consumer prices since 1955

Despite a flat reading for U.S. consumer prices in April, the annual inflation rate fell with the sharpest decline in 54 years, the government reported on Friday.

The Labor Department said the Consumer Price Index (CPI) remained unchanged in April after decreasing 0.1% in March. However, a reduction in the cost of energy over the past 12 months helped drive the annual rate 0.7% lower, marking the second straight monthly dip and the biggest decline since August 1955.

"The era of U.S. consumer price deflation is now upon us as the ongoing economic recession and deteriorating labor market conditions continue to weaken the bargaining power of retailers and laborers alike, thereby quenching the once raging inflationary flames," Millan Mulraine, economics strategist for TD Securities, was quoted on Forbes.com

There is a debate raging between economists on whether a threat to the approaching economy is rising inflation or spiraling, out of control falling prices, known as deflation. Continue reading Annual inflation at -0.7%, sharpest drop in consumer prices since 1955

Producer prices rise 0.3% on higher food prices

Producer prices in the U.S. reversed course from March and climbed to a higher than expected 0.3% in April, according to the Labor Department’s Producer Price Index (PPI) report on Thursday. The PPI measures prices at the factory door and inflation pressures before they reach the consumer.

In March, cheaper energy pushed down prices by 1.2%, leading to renewed fears of accelerating deflation. In April, the government data shows that a 1.5% increase in the cost of food offset a 0.1% fall in energy prices — energy costs were down 5.5% in March. And with that, some of the deflationary steam has been evaporated. Deflation is a persistent decrease in general prices, or the opposite of inflation.

"It’s impossible to see how deflation can persist given the amount of liquidity in the system," Maxwell Clarke, chief U.S. economist at 4Cast.com in New York, was quoted on Bloomberg. "With oil moving back up, the thought in people’s minds becomes that inflation could ultimately become a problem that outweighs deflation."

It is worth noting that the PPI index has fallen 3.7% when compared to the same period last year, marking the biggest year-over-year fall since January 1950. Continue reading Producer prices rise 0.3% on higher food prices

March consumer prices drop 0.1%, annual inflation tumbles 0.4%

Pushed down by declining energy prices, U.S. consumer prices dropped in March, and the annual inflation rate dipped for the first time since 1955, the Labor Department reported Wednesday.

The Consumer Price Index (CPI), the most closely watched gauge for inflation, fell 0.1% after increasing 0.4% in February. The decline was unexpected with many analysts forecasting an increase around 0.1%. On an annual basis, inflation was down 0.4%, marking the first decline since August 1955.

While deflation fears were eased with rising prices revealed in the CPI data for February, the latest numbers rekindle notice.

"We’re in a very deep global recession that’s going to hold prices down," Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, was quoted on Bloomberg. "Deflation is still something that’s a risk, though I don’t think we’ll get into a deflationary spiral."

However, during the last several weeks an outlook for potential stinging inflation has been more of the economic buzz. Continue reading March consumer prices drop 0.1%, annual inflation tumbles 0.4%

Cheap energy pushes producer prices down 1.2%

U.S. Producer prices fell 1.2% in March as lower energy prices drove down costs more than expected, according to a Labor Department report released Tuesday.

The Producer Price Index (PPI) measures prices at the factory door and inflation pressures before they reach the consumer. In a reversal after two months of gains, the latest PPI figures again raise notes of deflationary concern for some economists. However, they are outweighed by the Fed’s mission to spur economic activity.

"Clearly, deflation is a concern right now, though the biggest worry is to restore growth," Anika Khan, an economist at Wachovia Corp. in Charlotte, North Carolina, was quoted on Bloomberg. With inflation contained, "it gives the Fed more room to try to restore growth."

Deflation is a persistent decrease in general prices, or the opposite of inflation. Falling prices may seem like good news for consumers, but only to a certain extent. If prices mark sustained deflationary levels that strike below the cost to produce goods and services, further economic turmoil can ensue with production cuts, payroll reductions and deepening unemployment. Continue reading Cheap energy pushes producer prices down 1.2%

Fed to buy $1 trillion in securities, expects inflation to remain subdued

With expectations for inflation to remain under control and in a move to combat the recession, the Federal Reserve on Wednesday said it would pump more than $1 trillion into the economy.

In a statement following the conclusion of its two-day policy meeting, the Federal Open Market Committee (FOMC) said it would:

  • Increase its purchases of mortgage-backed securities by $750 billion, on top of the already announced $500 billion
  • Buy $300 billion of long-term Treasurys over the next six months

The Fed hopes the first measure will pull down mortgage rates and the second will help ease the credit crunch. Immediately following the news, U.S. stocks rallied, bond prices surged and gold prices reversed direction. Continue reading Fed to buy $1 trillion in securities, expects inflation to remain subdued