March 22, 2018

US consumer prices up slight 0.1 percent in July

12 August 2017, 12:36 | Lionel James

US consumer prices up slight 0.1 percent in July

US wholesale prices edged down 0.1 percent in July

Over the past 12 months, wholesale prices are up a moderate 1.9 percent, while core prices have risen 1.8 percent.

The Labor Department said the increases more than offset decreases in prices for new vehicles, communication, used cars and trucks, and household furnishings and operations.

The central bank had been expected to raise the benchmark lending rate a third time this year, but some economists are now ruling that out due to persistently weak inflation.

"A softer reading would mean fresh trouble as it would remind investors that inflation remains well below Fed's target and suggest that a December rate hike might not be that likely after all", he said.

USA consumer prices rose 0.1% in July compared with consensus forecasts of a 0.2% monthly gain and the year-on-year rate was 1.7% from 1.6% previously, but compared with an expected rate of 1.8%. Year to date, the CPI is up 0.9 percent, down sharply from the 1.5 percent recorded in the first seven months of 2016.

"I would expect the inflation data will show a little bit more upward pressure than what we have seen over the last four months or so", Dudley told reporters. During the last 12 months, the CPI showed consumer prices rose by 1.7%, slightly higher than in June but below the 1.8% expected.

"Instead, US inflation is like the most timid of creatures, and when it does rear its head, like it did earlier this year, it soon shuffles back into its den", said Michael Baxter, economics commentator at The Share Centre.

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And unlike previous months, July's gains were not entirely driven by the volatile food and fuel categories, since the increase was the same even when those categories were excluded, for both the monthly and the 12-month core measures.

Here's a summary of Bloomberg Intelligence on U.S. inflation.

The annual inflation rate as measured by consumer prices has been moving down since the winter after climbing above 2 percent. The July result followed a tiny 0.1 percent gain in June. The only index to decline over the past year was that for cereals and bakery products, which dropped 0.5 percent.

Evans said that "unless the data and the forecast change dramatically" he believed the Fed could wait until December before moving again to boost its benchmark rate, which is now at a still-low level of 1 percent to 1.25 percent.

The Labor Department will release its report on consumer prices today.

The Fed's preferred measure of inflation, the price index for personal-consumption expenditures, was unchanged in June from the prior month, the second straight flat reading.

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