Consumer prices posted a small rise in August, but outside of a big jump in volatile gasoline prices, inflation was essentially flat.
Consumer prices edged up 0.3 percent in August, matching the July increase, the Labor Department said Friday. Core inflation, which excludes food and energy, showed no increase in August.
The 2007-2009 recession and the weak recovery since have banished inflation as an immediate threat. Sluggish demand is preventing most businesses from raising prices and high unemployment is keeping a lid on wage pressures.
Over the past 12 months, core inflation is up just 0.9 percent, matching the lowest 12-month gain in 44 years. Overall prices are up a modest 1.1 percent during the past 12 months.
Analysts said that those who are fortunate enough to have jobs and stable finances are in good shape because prices are stable and earlier fears of deflation have mostly faded.
Businesses are not raising their prices because they don’t want to scare away the few customers they have. Many economists predicted this period of low inflation could last for several years.
Still, the absence of inflation hasn’t prompted Americans to spend enough to greatly improve the economic picture, and that’s unlikely to change in the short run. A separate report by the University of Michigan/Reuters poll of consumers said consumer confidence took a sharp dip in September.
Source: Associated Press