United States Inflation

United States

United States: Inflation falls to lowest level in nearly two years

August 15, 2012

In July, consumer prices remained flat over the previous month in seasonally adjusted terms. The figure mirrored the flat reading recorded in June and undershot market expectations, which had seen prices adding 0.2% over the previous month. The figure mainly reflected how a decline in energy prices was offset by higher prices for food. As a result of the monthly figure, annual headline inflation fell from 1.7% in June to 1.4%, its lowest level since November 2010. Meanwhile, the closely monitored core inflation index, which excludes food and energy, added 0.1% over the previous month, undershooting market expectations of a 0.2% rise. As a result, annual core inflation inched down from 2.2% in June to 2.1% in July. Annual average inflation over the previous 12 months moderated to 2.7% from 2.9% in June. The Federal Reserve expects PCE inflation (based on the price index for personal consumption expenditures) to average between 1.9% and 2.0% this year. For 2013, the Fed anticipates PCE inflation to range between 1.6% and 2.0%.


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