US consumer prices push higher; high unemployment likely to keep lid on inflation | The Business Standard
Skip to main content
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
The Business Standard

Saturday
December 02, 2023

Sign In
Subscribe
  • Home
  • Economy
    • Aviation
    • Banking
    • Bazaar
    • Budget
    • Industry
    • NBR
    • RMG
    • Corporates
  • Stocks
  • Analysis
  • World+Biz
  • Sports
  • Features
    • Book Review
    • Brands
    • Earth
    • Explorer
    • Food
    • Habitat
    • In Focus
    • Luxury
    • Mode
    • Panorama
    • Pursuit
    • Wheels
  • Epaper
    • GOVT. Ad
  • More
    • Subscribe
    • Videos
    • TBS Graduates
    • Thoughts
    • Splash
    • Bangladesh
    • Supplement
    • Infograph
    • Archive
    • COVID-19
    • Long Read
    • Interviews
    • Offbeat
    • Tech
    • Magazine
  • বাংলা
SATURDAY, DECEMBER 02, 2023
US consumer prices push higher; high unemployment likely to keep lid on inflation

World+Biz

Reuters
13 August, 2020, 11:05 am
Last modified: 13 August, 2020, 11:12 am

Related News

  • Why policy rate hikes fail to cool inflation in Bangladesh but worked in Sri Lanka
  • How to protect your money during times of inflation, currency devaluation
  • Argentina's next president Milei must tame inflation, turn around economy
  • Graduates have degrees, but can’t speak English: Speakers say, stress for linkages between edn institutions, pvt sector
  • Why mainstream economics got inflation wrong

US consumer prices push higher; high unemployment likely to keep lid on inflation

Economists polled by Reuters had forecast the CPI would rise 0.3% in July and the core CPI would gain 0.2%

Reuters
13 August, 2020, 11:05 am
Last modified: 13 August, 2020, 11:12 am
FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, US June 18, 2020. REUTERS/Bryan Woolston/File Photo
FILE PHOTO: Hundreds of people line up outside a Kentucky Career Center hoping to find assistance with their unemployment claim in Frankfort, Kentucky, US June 18, 2020. REUTERS/Bryan Woolston/File Photo

US consumer prices rose more than expected in July, with a measure of underlying inflation increasing by the most in 29-1/2 years amid broad gains in the costs of goods and services.

The report from the Labor Department on Wednesday, however, probably does not mark the start of worrisome inflation, and the Federal Reserve is likely to continue pumping money into the economy to aid the recovery from the COVID-19 recession.

The jump in prices is likely an unwinding of sharp declines experienced when nonessential businesses were shuttered in mid-March to slow the spread of the coronavirus. The higher prices further dispel fears of deflation, a decline in the general price level that is harmful during a recession as consumers and businesses may delay purchases in anticipation of lower prices.

The Business Standard Google News Keep updated, follow The Business Standard's Google news channel

"This should end any speculation that the pandemic-related slump in demand will quickly push the economy into a deflationary spiral," said Paul Ashworth, chief US economist at Capital Economics in Toronto. "But this is not a sign that the US is instead about to experience a bout of much high inflation because of supply restrictions."

The consumer price index rose 0.6% last month, with gasoline accounting for a quarter of the gain. The CPI increased by the same margin in June. In the 12 months through July, the CPI accelerated 1.0% after climbing 0.6% in June.

Excluding the volatile food and energy components, the CPI jumped 0.6% last month as the cost of motor vehicle insurance surged a record 9.3%. That was the largest gain in the so-called core CPI since January 1991 and followed a 0.2% rise in June. In the 12 months through July, the core CPI advanced 1.6% after increasing 1.2% in June.

Economists polled by Reuters had forecast the CPI would rise 0.3% in July and the core CPI would gain 0.2%.

The report followed on the heels of news on Tuesday that producer prices accelerated in July.

With at last 31.3 million people on unemployment benefits, inflation is hardly a threat in the services-oriented economy.

"The biggest input to service sector prices is labor, and when you have more that 30 million people claiming unemployment benefits there is likely to be a glut for quite a while," said James Knightley, chief international economist at ING in New York. "This will keep wage pressure subdued, thus limiting the upside for service sector inflation."

The Fed tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target. The core PCE price index rose 0.9% on a year-on-year basis in June. Economists expect July data, which will be released later this month, will show the core PCE price index rose about 1.4%.

The US central bank has adopted an extraordinarily easy monetary policy, slashing interest rates to near zero as well as making large-scale asset purchases and funneling loans to firms among other measures. But the budding recovery from the pandemic is showing signs of stress as new coronavirus infections spiral across the United States, forcing authorities in some of the hot spots to either shut down businesses again or pause reopenings.

Job growth slowed significantly in July. The economy, which entered recession in February, suffered its biggest blow since the Great Depression in the second quarter, with gross domestic product dropping at its steepest pace in at least 73 years.

Stocks on Wall Street were trading higher, with the S&P 500 .SPX index edging toward a record high. The dollar .DXY fell against a basket of currencies. US Treasury prices were trading mostly lower.

Food price relief 

In July, gasoline prices advanced 5.6% after soaring 12.3% in June. Food prices fell 0.4%, the first decrease since April 2019, after rising 0.6% in June. The cost of food consumed at home dropped 1.1%, with beef prices tumbling 8.2% after surging in recent months. But the cost of food consumed away from home rose 0.5%, with full-service meals increasing 0.4%.

Owners' equivalent rent of primary residence, which is what a homeowner would pay to rent or receive from renting a home, rose 0.2%. That followed June's 0.1% gain, the smallest rise since July 2013. Many tenants have entered into forbearance agreements with landlords.

Consumers also paid more for healthcare in July, with prices rising 0.4%. The cost of doctor visits increased 0.7% and prices for hospital services rose 0.2%. The cost of prescription medication, however, fell 0.2%.

Prices for wireless telephone services rose 3.6%. Prices of used cars and trucks increased 2.3% after three straight monthly declines. The cost of airline fares jumped 5.4%, the biggest rise since July 1999. Prices for hotel and motel accommodation increased 1.3%.

New motor vehicles prices gained 0.8% and those of apparel advanced 1.1%. There were also increases in the prices of household furnishings, recreation, personal care products and services.

"The weakness in rents is arguably more indicative for longer-term inflation trends than the rebounds in travel and core goods, and the weakness is more likely to persist" said Oscar Munoz, macro strategist at TD Securities in New York.

Top News

US economy / Jobs / consumer price / inflation

Comments

While most comments will be posted if they are on-topic and not abusive, moderation decisions are subjective. Published comments are readers’ own views and The Business Standard does not endorse any of the readers’ comments.

Top Stories

  • A file photo of Election Commission building. Photo: Collected
    Decision to transfer UNOs, OCs based on field level info: EC
  • File photo of Awami League General Secretary and Road Transport and Bridges Minister Obaidul Quader
    Taking action for poll-related violence or chaos is EC's responsibility: Quader
  • Dhaka-Cox's Bazar train delayed by a half hour after 'nuts and bolts removed' from rail line
    Dhaka-Cox's Bazar train delayed by a half hour after 'nuts and bolts removed' from rail line

MOST VIEWED

  • Illustration: TBS
    I am afraid even to post a thank you note on Facebook: Khadija
  • US dollar banknotes are seen in this illustration taken on 10 March 2023. Photo: Reuters
    Remittance dollar surges to Tk123, defying efforts to control it
  • The above shows a pediatric hospital in California in January 2021, when hospitals in the US were hit by a wave of sick children  Photo AFP by Getty Image
    What is White Lung Syndrome? Mysterious pneumonia fast striking children
  • Coxs Bazar express started for Dhakat at 12:40pm on 1 December. Photo: TBS
    Train to the sea: Dhaka-Cox's Bazar rail service begins
  • EU wants Bangladesh to act on labour rights as pledged
    EU wants Bangladesh to act on labour rights as pledged
  • The Merlion and Marina Bay Sands in Singapore.
Photo: Bloomberg
    These are the world's most expensive cities to live in right now

Related News

  • Why policy rate hikes fail to cool inflation in Bangladesh but worked in Sri Lanka
  • How to protect your money during times of inflation, currency devaluation
  • Argentina's next president Milei must tame inflation, turn around economy
  • Graduates have degrees, but can’t speak English: Speakers say, stress for linkages between edn institutions, pvt sector
  • Why mainstream economics got inflation wrong

Features

Photo: Rony Rezaul

Stand out in Style: Explore Apex's Wedding Season Collection

2h | Mode
TBS Illustration

The origins of electoral symbols

8h | Panorama
Jungle Passports: The tales of border societies interacting beyond the lines

Jungle Passports: The tales of border societies interacting beyond the lines

8h | Panorama
TBS Sketch

What Google and Facebook owe news publishers

8h | Panorama

More Videos from TBS

Bangladesh still unbeaten in Tests in 2023

Bangladesh still unbeaten in Tests in 2023

1h | TBS SPORTS
Bangladesh sets new record in labour exports as year nears end

Bangladesh sets new record in labour exports as year nears end

48m | TBS Today
America's oldest dictionary announces 'Word of the Year'

America's oldest dictionary announces 'Word of the Year'

4h | TBS Stories
Keep some funds for good stocks

Keep some funds for good stocks

5h | TBS Markets
EMAIL US
[email protected]
FOLLOW US
WHATSAPP
+880 1847416158
The Business Standard
  • About Us
  • Contact us
  • Sitemap
  • Privacy Policy
  • Comment Policy
Copyright © 2023
The Business Standard All rights reserved
Technical Partner: RSI Lab

Contact Us

The Business Standard

Main Office -4/A, Eskaton Garden, Dhaka- 1000

Phone: +8801847 416158 - 59

Send Opinion articles to - [email protected]

For advertisement- [email protected]