This morning’s report from the Bureau of Labor Statistics suggests that worries about deflation are, at the very least, premature:
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. (Before seasonal adjustment, the all items index was unchanged for the month.) Over the last 12 months, the index increased 1.2 percent before seasonal adjustment.
The energy index posted its first increase since January and accounted for over two thirds of the seasonally adjusted all items increase. Both the gasoline and household energy indexes turned up in July after a series of declines. The food index, in contrast, declined in July, largely due to the fourth consecutive decline in the fruits and vegetables index.
The index for all items less food and energy rose 0.1 percent in July after increasing 0.2 percent in June. The indexes for shelter, apparel, used cars and trucks, and tobacco all continued to increase in July. In contrast, the indexes for medical care and recreation turned down in July and the indexes for airline fares and household
furnishings and operations continued to decline. The 12-month change in the index for all items less food and energy remained at 0.9 percent for the fourth month in a row.
We don’t have hyperinflation, a prospect which has been worrying some. We don’t have deflation, something that’s been worrying others.
However, we also don’t have a bounce in retail sales, new jobs being created, a resurgence in manufacturing, or an increase in net exports. While today’s news is welcome, although prices are neither too hot nor too cold, the overall economy is far from just right.
Leonhardt had an interesting article in the NYT a few days ago about how wages for the employed have risen substantially in the last year. Interestingly, the increase for both private and government workerswas about the same.