Consumer Prices Up 1.2% from Year Ago

Consumer prices rose in July by the most since last August as energy costs increased for the first time in five months.

The Labor Department said Friday that the Consumer Price Index, the government's most closely watched inflation measure, increased by 0.3 percent in July, after three months of declines. Wall Street economists expected a smaller increase.

Over the past year, consumer prices rose by 1.2 percent, the department said. That's up slightly from last month's 1.1 percent pace but still a mild increase. One small benefit of the weak economy is that it is keeping prices in check. Consumers are spending cautiously and saving more, which makes it harder for companies to raise prices.

Excluding volatile food and energy prices, the so-called "core" index increased by 0.1 percent in July, as the cost of housing, clothes, and used cars and trucks all rose.

Core prices moved up by 0.9 percent in the past year for the fourth month in a row, the department said. That's below the Federal Reserve's inflation target and is the slowest pace in 44 years.

July's increase in consumer prices may assuage concerns, raised in recent weeks by some Federal Reserve officials, that the economy is moving toward deflation.

Deflation is a widespread and prolonged drop in the price of goods, real estate and stocks. It also reduces wages and can make it harder to pay off debts. The U.S.'s last serious case of deflation was during the Great Depression.

Most economists don't believe deflation will happen. But they are watching consumer prices closely for any signs of it.

Meanwhile, tame inflation allows the Federal Reserve to keep the key interest rate it controls at a record low of nearly zero percent in an effort to bolster economic growth. The Fed usually fights rising inflation by raising rates.

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mrtaxattorney

Obama blamed it all on 'the prior administration' and could not comment anymore cause he was playing golf

August 14 2010 at 9:28 PM Report abuse rate up rate down Reply
marine1942

Was this article written by the white house ??

August 14 2010 at 5:25 PM Report abuse rate up rate down Reply
rak458

You can't just print money with reckless abandon and not see inflation.
It is a face and reality that when you over supply the money market, it
has less value, and raises prices. Nothing new here. But we have an executive
branch that has to have skipped economice 101.

August 13 2010 at 2:00 PM Report abuse +1 rate up rate down Reply
thepetermedic

seems all of washingtons band aids are comming off never should have been put on in the first place now will take twice as long to stich these open sores up

August 13 2010 at 1:36 PM Report abuse +5 rate up rate down Reply
WilliamSowles

This current situation is not the collapse of capitalism, but rather the inroads of Soviet-style socialism. Folks, it will get worse before it gets worse.

August 13 2010 at 1:33 PM Report abuse +4 rate up rate down Reply
ginnatycpa

Deflation...another boogy man of economists for arguing for grearer Gov. stimulus at the price of endenturing our grandchildren with more debt.

August 13 2010 at 1:04 PM Report abuse +1 rate up rate down Reply
1 reply to ginnatycpa's comment
Bud & Marie

Gennatycpa - What is your "guess" as to where we would be without the stimulus plan? You probably would have any grand kids!

August 15 2010 at 11:09 AM Report abuse rate up rate down Reply
Pinot Man

every press release that comes out of DC is done to make this person in office look like
JESUS" AND THAT HE AINT!!!!WAKE UP AMERICA, WERE HEADED TOWARDS COMMUNISSEM AND YOU WONT KNOW WHAT HIT YOU? AMERICAS ATTENTION SPAN LAST BUT TWO WEEKS.AND YOU CONTINUE TO READ YOUR LOCAL FISH WRAP FOR \NEWS. HELL, I DONT TRUST FOX ANYMORE. TOO MANY RINOS AT FOX!!!!!

August 13 2010 at 1:03 PM Report abuse rate up rate down Reply
thepetermedic

yea and our engery costs have went up to so wheres our raise ????

August 13 2010 at 12:59 PM Report abuse +5 rate up rate down Reply
cltnsdf

Let the whole criminal enterprise called "capitalism" collapse. LOL at the very notion of paying back debt(s) becoming difficult. If it becomes in any way difficult, I will cease paying and I hope that millions and millions of others do exactly the same. Oh, and don;t ever just "give" anything back to the repo thugs- DESTROY it first including the house.

August 13 2010 at 12:44 PM Report abuse -2 rate up rate down Reply
sudple

Simple Answer, the Goverment Administration and Tax Increase projections along with uncertainty for Business within this Administrations Term.

August 13 2010 at 12:09 PM Report abuse +1 rate up rate down Reply