Fear of inflation spike receding or not?

September 16, 2009 by · Leave a Comment
Filed under: Economic News 

It is funny how these CPI statistics are reported in general and how the media reports them.  We seem to keep focusing on inflation without food and energy, when those are the most important items in our daily lives other than housing.  I am not going on a big rant about this subject but if you need more proof on where expectations for inflation in then look at the price of gold.  Gold traditional reacts based on inflation expectations and its usually tracks as a inverse of the U.S. dollar so when the dollar falls in value you will see the price of gold increase.  Inflation is baked into the cake when this supposed recovery hits and growth resumes.

Herald, Miami – Deep discounts on clothes and plummeting car and gasoline costs helped keep a lid on prices in Miami-Fort Lauderdale, as national data also suggested there is little fear, in the short-term, of an inflationary spike.

The Consumer Price Index in the Miami-Fort Lauderdale region was down 1.8 percent versus a year ago, and dipped 0.1 percent compared to June, the Bureau of Labor Statistics reported Wednesday.

Nationally, CPI slipped 1.5 percent versus 2008 and ticked up 0.4 percent versus the previous month.

Economists were particularly focused on the “core” CPI, which excludes volatile food and energy prices, for hints that the billions of dollars worth of stimulus money sloshing into the economy might spark inflation.

Nationally, core CPI was up 1.4 percent versus last year, the smallest increase in five years, suggesting the Federal Reserve is unlikely to raise interest rates in the short term to ward off higher prices.

Housing costs, which represent 39 percent of core CPI, are expected to stay low for the foreseeable future, wrote Mark Vitner, the senior economist at Wells Fargo.

“The moderation in the housing components should allow the core CPI to continue to moderate on a year-to-year basis, which should further quell any fears that inflation will reaccelerate anytime soon,” he wrote in a letter to clients.

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