Consumer prices in the United States dropped in August, for the first time since January of this year, as gasoline prices fell, The Wall Street Journal said Wednesday (Sept. 16).
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Taken as a measurement, the consumer price index — itself a gauge of what Americans pay for several items across groceries, clothing and other items — was down 0.1 percent from July, according to information released by the Labor Department. That decline reverses price gains seen in each of the preceding six months.
The August slide was due to continued torpor in the oil markets, which has translated into further declines in the price of gasoline, down by nearly 25 percent over the past year. A “slice” of consumer prices — known as core prices and which exclude food and energy — were actually up 0.1 percent during last month. Generally speaking, the core data is considered by inflation watchers as a more accurate measure of what is actually happening to consumers’ buying power. Through the past year, prices as a whole are up 0.2 percent, while core prices are up 1.8 percent.
Though lower gas prices may give consumers the impression that disposable income is a bit more plentiful, lower inflation in fact signals that the U.S. and other nations are actually lagging. And, noted WSJ, the prices may give conflicting signals to the Federal Reserve, which is in the midst of an important policy meeting this week, discussing whether to raise interest rates that have been at historically low levels (near zero, in fact) since the Great Recession. The meeting ends Thursday, Sept. 17, and officials are expected to boost rates in the wake of job growth, which has brought U.S. unemployment down to 5.1 percent. Another economic measure, and one that the Fed also watches, known as the price index for personal consumption expenditures, shows anemic growth at 0.3 percent through the 12 months that ended this past July, while the core price basket (again, excluding energy) was up 1.2 percent.
Separately, the Labor Department released figures that showed U.S. inflation-adjusted weekly earnings were up 0.7 percent in August of this year. That growth came as hourly pay was up, as were hours worked.