Hi Bobby,
Believe it or not: inflation is still down according to the following article from Mercury News (Final Bell).
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09:30 AM ET 07/16/97
U.S. consumer prices rose 0.1 percent in June
(Adds analyst comment, combines takes)
By Peter Szekely
WASHINGTON (Reuter) - Consumer prices rose a scant 0.1
percent for the fourth month in a row in June, advancing at
their slowest pace in 11 years during the first half of the
year, the Labor Department said Wednesday.
The so-called core rate of inflation, which excludes
volatile food and energy costs, also rose only 0.1 percent last
month, the department said. In the first half of 1997, the core
rate rose at its slowest pace in 32 years, it said.
Wall Street analysts had expected the Consumer Price Index,
the government's most widely used measure of inflation, to rise
0.2 percent in June.
``I think what this is telling us is that there's almost a
complete lack of inflationary pressures in the economy,'' Cheryl
Katz, senior economist at Merrill Lynch & Co. Inc., told Reuters
Financial Television.
``People were expecting a good number and we got a great
number,'' added Cary Leahey, chief u.s. economist at High
Frequency Economics.
During the first half of the year, consumer prices rose at a
1.4 percent seasonally adjusted annual rate, compared with 3.3
percent in 1996. Declines in energy costs and restrained gains
in food prices were largely responsible for holding down the
increase, which was the smallest for the first half of the year
since 1986, the department said.
Excluding food and energy, consumer prices rose at a
seasonally adjusted annual rate of 2.4 percent in the first half
of 1997, their slowest pace since the first half of 1965.
The report, which showed no sign of a pick-up in inflation,
comes with the economy plowing into its seventh year of steady
growth -- including a surge earlier this year -- without any
serious threat of an acceleration in consumer prices.
After growing at a brisk 5.9 percent annual rate in the
first quarter of the year, most economists believe growth slowed
to a 2-2.5 percent pace in the second quarter. They expect the
pace to rev back up to between 3 and 4 percent in the second
half of 1997 as consumers increase their spending.
With little wage pressure present despite tight labor
markets and prices of finished goods charged by producers having
declined for six months in a row, most economists still see no
inflation on the horizon, even if the pace of growth picks up in
the second half of the year.
The June rise in consumer prices reflected an acceleration
in housing and medical costs that was largely restrained by
declines in transportation and apparel costs and flat energy
prices, the department said.
Food prices rose 0.2 percent last month after a 0.4 percent
rise in May. Fresh vegetable prices rose 2.4 percent, pork rose
1 percent and fresh fruits fell 1 percent.
Energy costs were unchanged last month after declining
sharply over the previous three months. Gasoline prices plunged
0.9 percent in June and home heating oil fell 0.7 percent, while
natural gas and electricity costs rose.
Prices of new cars retreated 0.1 percent in June for the
second consecutive month, while housing costs rose 0.3 percent
after a 0.1 percent May rise.
Medical costs rose 0.2 percent in June after rising 0.3
percent in May and were up 2.9 percent over the past 12 months.
Tobacco prices fell 0.9 percent in June, the largest drop
since a 5.1 percent decrease in September 1993, while
entertainment costs rose 0.5 percent last month.
Service costs, which account for more than half of the
overall Consumer Price Index, rose 0.3 percent, while commodity
prices fell 0.1 percent.
The Consumer Price Index stood at 160.3 in June, meaning
that a basket of goods that cost $100 in the 1982-84 period cost
$160.3 last month.
^REUTER@ |
