CPI BS- Energy, Health Care, Food and Education Costs Soar (but not in the government books...lying with statistics)
An unexpected dip in inflation at the consumer level eased investor fears on rising prices, setting a positive tone in trading. Consumer prices fell 0.1 percent in July, the first decline since November 2003. Excluding food and energy costs, the core CPI rose 0.1 percent, below economist expectations of a 0.2 percent rise. The retail inflation data for July reinforces the "Fed view that much of the spring rise in inflation was "transitory," according to Ian Sheperdson, chief U.S. economist at High Frequency Economics. "But good CPI numbers alone will not stop rates rising slowly," Sheperdson warned. Sheperdson said August CPI data is not likely to be as rosy due to the recent jump in oil prices.
In other economic news, investors welcomed a leap in new housing construction for July. Housing starts were up 8.3 percent from June's revised 1.826 million pace, which was a one-year low. Economists had been expecting a much smaller increase in July's starts, to an annualized rate of about 1.88 million, according to a survey conducted by CBS MarketWatch. Meanwhile, the Federal Reserve offered a mixed picture on industrial production in the U.S. The central bank said output of the nation's factories, mines and utilities rose in July, but June's decline was revised further downward, canceling out July's gains.
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