CPI Manages to Escape Deflation
The Labor Department's Consumer Price Index rose slightly more than expected in the month of February.
Investors and economists have worried that we are entering a deflationary cycle. A strong dollar, weak commodities and weak overseas economies are all to blame. The U.S. Labor Department has shown deflation on the producer side, but the Labor Department’s measurement of the Consumer Price Index (CPI) may offer at least some room to breathe on the deflation front.
The CPI rose by 0.2% on a seasonally adjusted basis in the month of February. The CPI’s core rate, excluding food and energy, was also up by 0.2%.
Tuesday’s report was slightly higher than expectations. Bloomberg and Dow Jones both had estimates of 0.2% on the headline CPI and 0.1% on the core CPI.
On a year-over-year basis, consumer prices were up by 1.7%. This is still under the 2.0% to 2.5% that the Federal Reserve is currently hoping for, but at least it is not much lower.
As a reminder, the FOMC’s recent message indicated that the Fed is expecting inflation to remain very soft for longer than expected. The members also lowered their growth forecasts and their path to raising interest rates further as well.
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Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
