US consumer prices decrease
Source: Agencies |
July 16, 2011, Saturday
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Print Edition
Print Edition
US consumer prices fell slightly more than expected in June to post their biggest drop in a year on weak gasoline costs, but underlying inflation pressures remain elevated.
The Consumer Price Index fell 0.2 percent, the US Labor Department said yesterday, the largest drop since June 2010, after rising 0.2 percent in May. Economists had expected prices to fall 0.1 percent. But stripping out food and energy, core CPI rose 0.3 percent after a similar gain in May and above economists' expectations for a 0.2 percent increase.
"We are getting a very, very sharp rebound in core inflation and much more than the Fed had bargained for. We will be at price stability and possibly through it before the end of this year," said Eric Green, chief economist at TD Securities in New York.
Separate reports showed manufacturing is weak. Factory output was flat nationally in June while a gauge of manufacturing in New York state fell again in July.
"What a dilemma, slow growth and higher core inflation," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
Overall industrial production rose in June for the first time in three months after revisions, on a jump in utilities and mining output, a Fed study showed. Manufacturing posted its weakest rise in the second quarter since the recession ended mid-2009, the Fed said.
The New York Federal Reserve said its "Empire State" general business conditions index was at minus 3.76 from minus 7.79 in June.
"It's still a disappointing sign that manufacturing sectors hit a bit of a stall but it's not conclusive," said David Resler, chief US economist for Nomura Securities in New York.
High inflation, driven by strong energy and food prices, undermined economic activity in the first quarter, with growth slowing sharply to a 1.9 percent annual rate after a brisk 3.1 percent expansion in the final three months of 2010. The economy is believed to have grown by between 1.5 percent and 2 percent in the second quarter.
Hopes of stronger growth during the July-September period have been dented somewhat by a weak labor market and retail sales in June.
The Consumer Price Index fell 0.2 percent, the US Labor Department said yesterday, the largest drop since June 2010, after rising 0.2 percent in May. Economists had expected prices to fall 0.1 percent. But stripping out food and energy, core CPI rose 0.3 percent after a similar gain in May and above economists' expectations for a 0.2 percent increase.
"We are getting a very, very sharp rebound in core inflation and much more than the Fed had bargained for. We will be at price stability and possibly through it before the end of this year," said Eric Green, chief economist at TD Securities in New York.
Separate reports showed manufacturing is weak. Factory output was flat nationally in June while a gauge of manufacturing in New York state fell again in July.
"What a dilemma, slow growth and higher core inflation," said David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.
Overall industrial production rose in June for the first time in three months after revisions, on a jump in utilities and mining output, a Fed study showed. Manufacturing posted its weakest rise in the second quarter since the recession ended mid-2009, the Fed said.
The New York Federal Reserve said its "Empire State" general business conditions index was at minus 3.76 from minus 7.79 in June.
"It's still a disappointing sign that manufacturing sectors hit a bit of a stall but it's not conclusive," said David Resler, chief US economist for Nomura Securities in New York.
High inflation, driven by strong energy and food prices, undermined economic activity in the first quarter, with growth slowing sharply to a 1.9 percent annual rate after a brisk 3.1 percent expansion in the final three months of 2010. The economy is believed to have grown by between 1.5 percent and 2 percent in the second quarter.
Hopes of stronger growth during the July-September period have been dented somewhat by a weak labor market and retail sales in June.
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