The consumer-price index declined 0.2 percent during August, indicating the cost of living in the US dropped in the last month for the first time since April 2013. Such a drop suggests inflation is falling short of the Federal Reserve’s desired goals.
The recent decline in energy costs and global growth are assisting in the containment of inflation. The minimal price increases have allowed the Fed to keep interest rates low as they move into their monthly asset purchase program in the next month. According to Brian Jones, senior economist at Societe General in New York,
Inflation is certainly benign…Inflation is not a front-burner issue. The [central bankers] have the high ground on this one, they are not going to do anything with rates for a long time.”
Energy costs declined by 2.6 percent in August since July, with gas prices averaging $3.38 a gallon as of September 15. Food costs increased 0.2 percent during this same time, a low rate than the 0.4 percent increase the previous month. The overall decline was also primarily influenced by declines in the prices of airline fares, recreation, household furnishings, clothing, and used automobiles.
Read more here- “U.S. Consumer Prices Drop for First Time in a Year,” (Michelle Jamrisko, Bloomberg)