It is important to point towards the fact that excluding the volatile food and energy categories, core prices tumbled 0.3 percent in September. The cost of food rose 0.4 per cent in September and 1.6 per cent on the year.
Advertisement
The Federal Reserve has said in the past that it feels “reasonably confident” that inflation would back to its 2 percent target before beginning to hike interest rates for the first time in seven years. The overall number is well short of that goal, but core inflation is close. September’s Consumer Price Index (CPI) was weak enough that consumers can consider it deflationary. The Labor Department says applications fell 7,000 last week to a seasonally adjusted 255,000.
“The low inflation level can reflect economic weakness”, said Chang Jian, an economist at Barclay’s Capital in China. When the CPI fell to 0.3 per cent in the year to March it represented the lowest level in New Zealand since 1999. This put it up 1.9% on the year, marking its…
Here in Cyprus, of course, we know all too well the consequences of falling prices, our inflation rate has been stubbornly below 0% since the 2013 bailout. On a y/y basis, headline PPI declined 1.1% (from 0.8%), as energy prices continue to weigh on the y/y rate, while core PPI rose 0.8% (from 0.9%). The main reason is low gas prices, which are keeping inflation in check.
Cheaper fuel, along with the overall price declines, may be helping consumers stretch their paychecks a little further. This week, two Fed governors, Lael Brainard and Daniel Tarullo, said they were anxious inflation would remain depressed even as the labor market improves.
Friday’s figures could increase the odds that the central bank will leave the official cash rate on hold at its next review on October 29.
Housing costs have been supporting inflation of late.
Advertisement
The index for final demand services decreased by 0.4 percent – the largest decline since February. The measure has climbed 2 percent over the past six months, the most since 2007. Airline fares also declined in the month.
