Consumer Price Index Nearly Flat On Low Prices Of Goods

Date: December 16, 2015

Falling Energy Prices Continue To Contribute To Stable CPI

According to the latest Bureau of Labor Statistics data, in November the consumer price index was unchanged after rising 0.2% in October. Core CPI, which excludes volatile energy and food prices, was up 0.2%, the same as its September and October increases. Meanwhile, energy prices fell 1.3% and food prices fell 0.1%. For the 12 months ended Nov. 30, prices under CPI were up 0.5% while core CPI prices rose 2%. The AP said that “declines in energy and food held down overall costs.” Reuters reported that November was the third consecutive month with a core CPI figure of 0.2%, reflecting higher rents, airline fares, prices of new cars, and healthcare costs. TD Securities economist Millan Mulraine predicted that Tuesday’s data would “shore up the Fed’s confidence in the inflation outlook as the firming in domestic prices will likely serve as a confidence booster in [the central bank’s] expectation for inflation to move back towards target in a timely manner.” Bloomberg News reported that the cheapest crude oil “since the global financial crisis in 2009 may keep inflation below” the Fed’s 2% goal “even as it boosts Americans’ purchasing power.” Ameriprise Financial economist Russell Price said: “Inflation is going to struggle to move toward the Fed’s goal. The recent move down in energy prices is prolonging that scenario,” which could be accompanied by “additional downward pressure” from the strong dollar.

What This Means For Small Businesses

The continued low CPI may be an indication that interest rates will soon be raised. Still, small businesses struggle to contend with an uncertain economy. In the latest NFIB report on Small Business Economic Trends, chief economist William Dunkelberg said that in the near term data suggested “not much pressure on prices from Main Street. Just hoping for a Happy New Year to show up.”

Additional Reading

The Wall Street Journal also reported the latest CPI data.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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