US consumer prices rose slightly in July

The statistics for the Consumer Price Inflation indices (CPI) released today reveal that the Consumer Prices Index (CPI) has turned positive, growing by 0.1% in the year to July 2015, up from 0.0% in the year to June 2015.

Excluding food and energy, which tend to be volatile month on month, core CPI also rose 0.1 per cent, down from 0.2 per cent in June.

Energy prices showed a more modest 0.1 percent increase, with higher gasoline prices partly offset by decreases by the other energy component indexes.

Consumer prices were up 0.2 percent annually through the month, following a slightly lower-than-expected monthly gain of 0.1 percent.

But it has also posed an obstacle to the Federal Reserve, which is waiting for evidence that inflation is rising to its 2 percent target before moving to raise interest rates and tighten monetary policy. Over the past year core prices are up 1.8%.

UK house prices increased by 5.7% in the year to June, an acceleration from 5.6% the month before, with the east of England and Northern Ireland driving the growth. “For now though, there will be plenty of people to say that the lack of any upward pressure to inflation justifies keeping rates at current levels for longer (and I shall continue to disagree strongly).”

The National Association of Realtors said Thursday existing home sales increased 2 percent to an annual rate of 5.59 million units.

“Food and motor fuel prices continued to fall and have helped stop a larger rise in the rate of inflation”.

Inflation has been pushed down by a dramatic decline in oil prices. But global prices have retreated again in recent weeks.

Persistently low inflation is a worry for the economy because it can slow the pace of wage increases and make it more hard for households and businesses to pay off debts. This comes two years after the sector had seen a period of stagnating prices.

“Indeed, with inflation muted and another wave of austerity set to hit the economy, we still think the MPC will hold off from raising interest rates until Q2 2016 and will increase Bank Rate to just one per cent by the end of next year”.