Category Archives: Inflation

Federal Reserve, Inflation, Interest Rates

Fed December minutes paint darker economic picture, lower inflation

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Minutes taken during the closed-door Federal Reserve December 15-16 meeting paint a darker than expected picture for the economy, with further contraction and rising unemployment on the horizon.

At the conclusion of its historic meeting, the Federal Open Market Committee (FOMC) slashed rates to a record low of between zero and 0.25%. The minutes, which provide much more detail and are always released several weeks after the official meeting, cite specific expectations reaching into 2009 and 2010. Continue reading Fed December minutes paint darker economic picture, lower inflation →

Federal Reserve, Inflation, Inflation Rates

Fed slashes rates to record low, zero to 0.25%

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The Federal Reserve aggressively lowered its benchmark federal funds rate to a range of between zero percent and 0.25%, and said it would "employ all available tools to promote the resumption of sustainable economic growth."

Slashing the overnight lending rate by such a degree was an unexpected Fed move. Most everyone had expected a 0.5% cut from its prior 1%. The rate is now at its lowest level since the government started keeping records in 1954.

"It’s a highly unorthodox and creative step," Michael Woolfolk, senior currency strategist, at the Bank of New York-Mellon in New York told Reuters. "We think it’s the best possible move for the U.S. consumer and for the financial market."

The announcement was made by the Federal Open Market Committee (FOMC), who released the following statement: Continue reading Fed slashes rates to record low, zero to 0.25% →

Inflation, Inflation Rates

Consumer prices fall record 1.7%, inflation drops to 1.1%

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Inflation for consumer products plummeted again during November as prices were pushed down again by free-falling energy costs. Consumer prices declined by a record level for the second consecutive month, the Labor Department reported Tuesday. The annual inflation rate is at 1.1% compared to the 3.7% increase in October.

The Consumer Price Index (CPI), the closely watched inflation barometer, fell in November by a seasonally adjusted 1.7% after October’s record 1.0% decline. Economists had expected a sharp drop between 1.3%-1.4%, which would have been a record itself. The latest figure marks the biggest decline since the government started keeping monthly data in 1947.

"This is scary stuff,” Mike Schenk, an economist for Credit Union National Association was quoted on MarketWatch. "We are teetering on the brink of a massive downward spiral. Deflation is a threat."

"I think we’re in a deflationary spiral that will probably go on until sometime next year," Thomas di Galoma, head of U.S. Treasury trading at Jefferies & Co. in New York was quoted at Reuters. "I think it will probably go on through the majority of 2009."

Falling prices is generally good news for consumers, but only to a certain point. Continue reading Consumer prices fall record 1.7%, inflation drops to 1.1% →

Inflation, Inflation Rates, Site Information

Inflation rates and data updated for December 2008

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US Inflation Calculator has been updated with the latest Bureau of Labor Statistics (BLS) figures released Tuesday, December 16 for the entire month of November.

The latest government report has November’s annual rate of inflation down to 1.1%, which is an enormous decline when compared to October’s 3.7%, September’s 4.9% and a rate of 5.4% in August.

On a monthly basis, the Consumer Price Index (CPI) declined 1.9 percent following October’s 1% decline. September was virtually unchanged while August dropped 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

For an in depth look at November consumer price changes, read Consumer prices fall record 1.7%, inflation drops to 1.1%.

 

Federal Reserve, Inflation, Interest Rates

Fed seen lowering rates toward zero without inflation worries

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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 →

Federal Reserve, Inflation, Inflation Rates

Producer prices drop 2.2% in November

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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 →

Inflation, Inflation Rates

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

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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, Inflation Rates, Site Information

Inflation rates and figures updated for November 2008

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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%.

Federal Reserve, Inflation, Inflation Rates

Producer prices set record drop of 2.8% in October

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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 →

Federal Reserve, Inflation, Interest Rates, Site Information, Uncategorized

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

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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 →