The Labor Department reported today that the consumer price index was unchanged in September and that core CPI (excluding food and energy) fell 0.1%.
The markets may take some cheer from the marked reversal in inflationary pressures, but the flip side is that the change points to deflationary forces starting to take hold. From the Wall Street Journal:
U.S. consumer prices were flat in September, a government report showed, the latest indication that falling energy prices and the economic downturn are rapidly easing pressure on inflation.
The figures, which included a slim gain in core prices excluding food and energy, should make it easier for Federal Reserve officials to lower official interest rates even further to address severe strains in financial markets.
The number of U.S. workers filing new claims for unemployment benefits fell a second-straight time last week, a government report showed, as the effect of recent hurricanes continued to fade from the data. Still, the trend remains quite soft for labor markets as reflected by another rise in total claims lasting more than one week to their highest level in more than five years.
The consumer price index was unchanged in September, the Labor Department said Thursday. It fell in August for the first time in almost two years. Excluding food and energy, the CPI advanced 0.1% last month. Both figures were 0.1 percentage point below Wall Street forecasts, according to a Dow Jones Newswires survey….
Consumer prices rose 4.9% on a year-over-year basis, down from August and now well off the 17-year high of 5.6% reached in July. The core CPI grew a more modest 2.5% compared to September 2007, though that’s still well above the Fed’s long-term goal of 1.5% to 2%.
But inflation rates, particularly at the headline level, should fall further in coming months. Oil prices tumbled again Wednesday, closing under $75 per barrel for the first time in more than one year. Leading consumer price indicators like import and producer prices each posted big drops in September for a second-straight month.
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The concept that ever rising real estate, food, fuel and shipping costs are good could only have formed in the hermetically sealed echo chamber that is Manhattan.
Meanwhile the Manhattan focused mass media continues trying to deceive the public. Witness a current AP story lamenting the adverse impact of falling oil prices on “investors”.
It’s the best broader economic news I’ve seen for a year.
This Reuters piece is a good candidate for non-story of the year.
Market falls after weak Philly Fed report Thursday October 16, 10:57 am ET
NEW YORK (Reuters) – Stocks slid in skittish trading on Thursday after a report showed a steeper-than-expected drop in factory activity in the Mid-Atlantic region for October.
The Philadelphia Federal Reserve Bank said its business activity index slumped unexpectedly to -37.5in October from 3.8 in September.
As if any different outcome was possible after the identical previous adjacent NY Fed region manufacturing report.
Stories like this help fuel widespread beliefs in conspiracy theories whereby secretive elites controlling the mass media intentionally publish misinformation.
I believe reporters help spread such ideas to cover their own invincible ignorance.
The no inlfation deflation meme is the sound of one hand clapping. Yes deflation in things you want but inflation in things you need. For example look at the report this am: food was up .6% M|M or 7% annualized. CPI is also the benchmark used to set the payout on tips.
I’m sure you’re correct that the market will take cheer from the reversal in inflationary pressures, but is lower inflation due to demand destruction something the market should be happy about?