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US Consumer Prices Rise Less Than Expected

The cost of living in the U.S. rose less than forecast in August, a sign it will take time for inflation to reach the Federal Reserve’s goal.

The consumer-price index increased 0.1 percent, the least in three months, after a 0.2 percent gain in July, Labor Department figures showed today in Washington. The median forecast in a Bloomberg survey of economists called for a 0.2 percent gain in August. The core measure, which excludes food and fuel, also rose 0.1 percent last month.

The figures come as Fed policy makers meet today and tomorrow to debate whether economic growth is strong enough to begin slowing the pace of bond purchases. Central bankers have said they are also watching prices to ensure the U.S. doesn’t slip into a long period of diminishing increases, or disinflation, that damages the expansion.

“There’s still quite a bit of slack in the labor market, wage gains are positive but have been modest,” said Ryan Wang, an economist at HSBC Securities USA Inc. in New York who correctly forecast the gain in the CPI. “The Fed is committed to defending their 2 percent inflation goal from both sides, and currently inflation is running below that goal.”

Stock-index futures were little changed after the figures as the Fed prepared for its two-day meeting. The contract on the Standard & Poor’s 500 Index expiring in December rose 0.1 percent to 1,692 at 8:55 a.m. in New York.

Bloomberg [1]

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Dean Popplewell

Dean Popplewell [6]

Vice-President of Market Analysis at MarketPulse [7]
Dean Popplewell has nearly two decades of experience trading currencies and fixed income instruments. He has a deep understanding of market fundamentals and the impact of global events on capital markets. He is respected among professional traders for his skilled analysis and career history as global head of trading for firms such as Scotia Capital and BMO Nesbitt Burns. Since joining OANDA in 2006, Dean has played an instrumental role in driving awareness of the forex market as an emerging asset class for retail investors, as well as providing expert counsel to a number of internal teams on how to best serve clients and industry stakeholders.
Dean Popplewell
Dean Popplewell

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