September 19, 2010

MEANWHILE, IN THE REAL WORLD...:

Inflation rate flat amid price confusion (Annalyn Censky, September 17, 2010, CNNMoney.com)

[T]hose modest price increases don't offer companies enough of a revenue boost to hire workers, at time when high unemployment is the major factor stalling the recovery, said Mark Vitner, a senior economist with Wells Fargo Securities.

He puts the odds of deflation happening -- meaning CPI dips below zero -- at 25%.

"We don't have a whole lot of inflation right now, and the economy seems to be losing momentum. But when you look at the numbers, what we see is low rates of inflation, no actual deflation," he said.

Rising energy and food prices are the biggest drivers keeping the overall index above water, with gasoline rising 4.1% over the last year and food rising 1%. The entire energy index -- which includes fuel, electricity and gas utilities -- rose 3.8%.

Stripping out the volatile food and energy component though, the so-called core CPI remained unchanged, showing prices rose 0.9% over the last year.

That low number means that prices excluding energy and food are also rising, but at a snail's pace -- a trend that mimics the economy at large, which has also grown lately but at a much slower rate than economists' had previously hoped.


...you can't actually find anything the price of which has increased.

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Posted by Orrin Judd at September 19, 2010 7:23 AM
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