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Friday, September 15, 2006
Affect Of Lower Oil Prices Felt In US Economy, Inflation Falls, Consumer Price Index Rises "Inflation fell for the second month in a row in August, reducing pressure on the Federal Reserve to raise interest rates when it meets next week. The consumer price index, a closely watched indicator of inflation, rose 0.2 per cent last month, in line with economists’ predictions, after rising 0.4 per cent in July. On a year-on-year basis, CPI inflation is running at 3.8 per cent, down from 4.1 per cent in July. The Fed has argued that a series of interest rate rises combined with slowing levels of economic growth have done enough to curb inflation, and consequently decided upon a pause in rate increases in August. Analysts said the slowing of inflation implied in the latest CPI report suggests the Fed is likely to keep rates on hold. “This CPI data helps support the notion that the Fed will not need to raise rates further, and that inflation should decline further in coming months,” said Rob Carnell, an analyst at ING Bank. However, core inflation, which excludes volatile food and energy prices, is still rising - in August it nudged higher to reach 2.8 per cent year-on-year from 2.7 per cent in July. This remains above Fed chairman Ben Bernanke’s preferred range of 1 to 2 per cent." The Business Courier reports: "Energy prices fell in August, but jumps in other categories, including food and beverages, kept the Midwest Consumer Price Index on an upward trend. The index rose 0.3 percent in August, compared to the month before, and is up 2.8 percent over August 2005, according to the Bureau of Labor Statistics, part of the U.S. Department of Labor. August results by category, compared to July 2006: Food and beverage prices were up 0.5 percent, for the month and 2.5 percent for the 12-month period. Housing prices rose 0.1 percent. Prices for electricity were up 0.3 percent, while gas service dropped 0.6 percent, reflecting the usual summer trend, when air conditioning replaces heating. Apparel prices jumped 3.8 percent, an annual trend, since fall merchandise is usually introduced in August. Transportation prices declined 0.4 percent, thanks to a 1.3 percent drop in motor fuel prices. Nonetheless, motor fuel prices have risen 20 percent over the year. Medical care costs rose 0.4 percent, with medical care services were up 0.5 percent, and professional services rose 0.2 percent. Recreation prices were unchanged over the month, while education and communication prices rose 0.7 percent. Other goods and services, including tobacco and personal care items, climbed 1.9 percent." It's a bad time to be living in what has almost become the typical middle-class American way -- mired in credit card debt, mortgaged to the hilt, and with insufficient savings. Interesting how times have changed, so many teetering on the edge of bankruptcy in fine houses filled with all the latest gadgets and luxuries. Seems likes there's something to be said for the old-fashioned save up the money for items that are not absolute essentials rather than buy on credit way of life. Kind of makes me grateful I was too much of a financial screw up to get credit cards, mortgages or loans in the days of my youth. Now, I'm cool with cash, it works for me. Blogger News Network is advertiser-supported, and your visits to our advertisers help BNN to meet its expenses. Help keep us afloat! posted by Sharon Secor at 1:43 PM |
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