More Tame Inflation

There’s more good news on inflation. According to the government, consumer prices were unchanged last month. To be precise, it’s the third month in a row of a teeny, tiny decline. Over the last year, inflation is running at just 1.55%.

Some of this is due to lower gasoline prices. The “core rate,” which excludes food and energy, rose by 0.24% in January. In the last year, core inflation is up by 2.15%.

Economists polled by Reuters had forecast the CPI edging up 0.1 percent in January and the core CPI rising 0.2 percent.

The dollar rose against a basket of currencies after the data, while U.S. stock index futures held gains. Prices of U.S. Treasuries were trading lower.

Despite the increases in the core CPI, underlying inflation remains moderate. The Fed, which has a 2 percent inflation target, tracks a different measure, the core personal consumption expenditures (PCE) price index, for monetary policy.

The core PCE price index increased 1.9 percent on a year-on-year basis in November after rising 1.8 percent in October. It hit 2 percent in March 2018 for the first time since April 2012. PCE price data for December will be released on March 1.

Posted by on February 13th, 2019 at 12:49 pm


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