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Sunday, November 20, 2011 1:50:04 AM
Inflation Drops for First Time in Four Months
If you take a look at this graph of the U.S. Consumer Price Index, you'll see that the index has dropped for the first time in months. Good news for a lot of Americans.
This index shows how overall product prices affect day to day consumers. A rising consumer price index (CPI) indicates that prices have gone up and that prices are escalating more quickly than people's wages.
When this occurs the purchasing power of the consumer dwindles. This has been an all-too-familiar feeling for year 2011; a year that has been dominated by a rapidly and sharply increasing CPI. October was only the second time that the consumer index has fallen since late 2010.
According to the U.S. Department of Labor, Bureau of Labor Statistics, the consumer price index fell by 0.1 percent after rising by 0.3 percent this past September.
According to experts, the four percent price dip of petrol led to the overall CPI decline.
On news of the fallen CPI, speculation suggests that the Fed may finally get around to initiating their often-talked about third dose of quantitative easing sometime in the beginning of 2012. Paul Ashworth, economist with Capital Economics said the Fed will “probably” launch QE3 if unemployment remains stagnant, close to 9 percent.
Whether that's what the economy really needs is an entirely other story...
Those concerned about rising prices will point to the 0.1pc increase last month in core inflation, a measure that excludes the more volatile food and energy components. Core inflation is now 2.1pc higher than it was a year ago, while headline inflation is 3.5pc stronger.
However, officials such as Chicago Fed chief Charles Evans, who favours more aggressive stimulus from the central bank, will instead point to a slowing in the annual gains in core inflation over the last three months as evidence that the worst of the increases are finished.
This decline in inflation is welcome news for Mr. Ben Bernanke who has repeatedly said that high oil prices were to blame for struggling consumers. He also said that would be a “temporary” predicament.
Perhaps October's decline represents “the start of the reprieve from 'transitory' price increases promised by the Fed,” said Alex Hoder, FTN Financial economist.
http://www.wealthwire.com/news/economy/2229
If you take a look at this graph of the U.S. Consumer Price Index, you'll see that the index has dropped for the first time in months. Good news for a lot of Americans.
This index shows how overall product prices affect day to day consumers. A rising consumer price index (CPI) indicates that prices have gone up and that prices are escalating more quickly than people's wages.
When this occurs the purchasing power of the consumer dwindles. This has been an all-too-familiar feeling for year 2011; a year that has been dominated by a rapidly and sharply increasing CPI. October was only the second time that the consumer index has fallen since late 2010.
According to the U.S. Department of Labor, Bureau of Labor Statistics, the consumer price index fell by 0.1 percent after rising by 0.3 percent this past September.
According to experts, the four percent price dip of petrol led to the overall CPI decline.
On news of the fallen CPI, speculation suggests that the Fed may finally get around to initiating their often-talked about third dose of quantitative easing sometime in the beginning of 2012. Paul Ashworth, economist with Capital Economics said the Fed will “probably” launch QE3 if unemployment remains stagnant, close to 9 percent.
Whether that's what the economy really needs is an entirely other story...
Those concerned about rising prices will point to the 0.1pc increase last month in core inflation, a measure that excludes the more volatile food and energy components. Core inflation is now 2.1pc higher than it was a year ago, while headline inflation is 3.5pc stronger.
However, officials such as Chicago Fed chief Charles Evans, who favours more aggressive stimulus from the central bank, will instead point to a slowing in the annual gains in core inflation over the last three months as evidence that the worst of the increases are finished.
This decline in inflation is welcome news for Mr. Ben Bernanke who has repeatedly said that high oil prices were to blame for struggling consumers. He also said that would be a “temporary” predicament.
Perhaps October's decline represents “the start of the reprieve from 'transitory' price increases promised by the Fed,” said Alex Hoder, FTN Financial economist.
http://www.wealthwire.com/news/economy/2229
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