Wholesale food prices fell 0.8 percent last month after rising 0.3 percent in the prior month. Consumer energy prices are down 18.4 percent over the past year; unleaded regular gasoline prices have fallen 30.5 percent. The costs of eggs slumped, while beef and veal prices plunged 7.9 percent, the most since January 2004. Deflation (prices falling) is something that is much more serious than inflation (prices rising). The indexes for fuel oil, electricity, and natural gas declined as well.
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Hourly earnings adjusted for inflation rose 2.2 percent in September from a year earlier, a separate report from the Labor Department showed. Real wages have climbed a modest 2.2% in the past 12 months. That target is 2 percent, although it is benchmarked to an inflation index that is usually slightly lower than the CPI.
Top Fed officials are divided on whether to tighten monetary policy, with governors Lael Brainard and Daniel Tarullo this week urging against raising interest rates.
Housing costs have been supporting inflation of late. Those costs were up 0.8 percent from September 2014. In particular, the trade component fell 0.4% (previous +0.9%), reversing part of the strong reading in August, which reflected rises in trade margins by wholesalers.
In addition, the country’s ongoing economic restructuring means a trending slowness in demand for traditional industrial goods, which will restrain prices. It rose 0.2 percent in August.
Other inflation data sets have not been encouraging.
A big drop in energy prices pushed overall consumer inflation down 0.2 percent in September, following a 0.1 percent decline in August.
In the category for all other items, the index increased 1.3 percent.
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Well, it looks like muted prices for no Social Security hike for the cost of living adjustment are being justified for at least another month (followed by more ahead).
