Friday, August 14, 2009

CPI Data Indicate Minimal Inflation at Consumer Level

The Consumer Price Index decreased 0.2 percent in July before seasonal adjustment, according to the Bureau of Labor Statistics. Over the last 12 months the index has fallen 2.1 percent, as a 28.1 percent decline in the energy index since its July 2008 peak has more than offset increases of 0.9 percent in the food index and 1.5 percent in the index for all items less food and energy.

On a seasonally adjusted basis, the CPI-U was unchanged in July following a 0.7 percent increase in June. Small declines in the food and energy indexes offset a small increase in the index for all items less food and energy. The food index declined 0.3 percent in July with all six major grocery store food groups posting declines. The energy index, which rose 7.4 percent in June, fell 0.4 percent in July. Decreases in the indexes for gasoline, fuel oil, and electricity more than offset an
increase in the index for natural gas.

The numbers are probably a pretty good reflection of what is going on in the economy at this point, given the slowed Bernanke money printing and the continued strong demand to hold cash.

The numbers probably do not reflect well the true immediate consumer price products, i.e. very short term in nature instant consumption goods such as movie tickets and books. Those are much more likely to be showing price strength at this time.

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