(Source: www.businesstimes.com.sg)

While inflation remains tame, the slight increase could help ease concerns among Federal Reserve policymakers who had been left befuddled by the absence of inflation in the first half the year despite steady job creation and falling unemployment. SOURCE:AFP

[WASHINGTON] US consumer inflation rose modestly in July, showing signs of life after months of weakening price pressures, the Labor Department reported Friday.

While inflation remains tame, the slight increase could help ease concerns among Federal Reserve policymakers who had been left befuddled by the absence of inflation in the first half the year despite steady job creation and falling unemployment.

After raising benchmark interest rates twice so far in 2017, the Fed had been expected to increase once more before the end of the year. But some economists had written this off in light of flagging inflation.

Rising costs for housing, medical care and food helped push the Consumer Price Index (CPI) up 0.1 per cent in July, seasonally adjusted, after no change in June and a 0.1 decrease in May.

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However, that was still half of the increase expected by economists for the indicator tracks costs of houses goods and services and is a closely watched measure of inflation.

The 12-month CPI measure also gained a tenth of a point in July to 1.7 per cent, posting its first rise in five months after steady declines, but still well below the Fed’s two percent target.

And unlike previous months, July’s gains were not entirely driven by the volatile food and fuel categories, since the increase was the same even when those categories were excluded, for both the monthly and the 12-month core measures.

Core CPI has risen by 0.1 per cent for four consecutive months, but that was half of the consensus forecast for July.

Still, prices for meat had their largest one-month gain in nearly three years, adding one per cent. The cost of frankfurters rose 10.5 per cent, the largest monthly increase since March 2002.

Weak price pressures this year mean inflation has been well behind where it was over the same period in 2016. Year to date, the CPI is up 0.9 per cent, down sharply from the 1.5 percent recorded in the first seven months of 2016.

AFP

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