Prices paid by American households declined in August as cheaper gasoline helped keep inflation below the objective of Federal Reserve policymakers.
The U.S. Department of Labor released August’s CPI reading as being a drop by 0.1%.
Gas prices fell over 4 percent in August after increasing in previous months.
Excluding volatile food and energy components, so-called core prices rose 0.1 per cent.
Lower inflation is also giving American workers more relief. In the 12 months through August, the CPI rose 0.2 percent after a similar gain in July.
The Fed has signalled it wants to raise zero-level interest rates this year, but speculation is divided whether it will take that step at this week’s meeting.
The lack of inflation has been a persistent issue for years and has failed to reach the Fed’s target of two percent. Over the past 12 months, overall prices are up just 0.2 percent, while core inflation is up a modest 1.8 percent. The majority of market players expect the headline inflation rate to slow from 0.1% to 0.0%, which could soften demand for the Pound as it would likely be seen as a sign that inflation prospects are not strong enough to warrant an interest <strong>rate hikestrong> from the Bank of England anytime soon.
Tokyo’s Nikkei index closed up 0.8 percent.
Fed officials, set to meet Wednesday and Thursday, are looking to raise the benchmark interest rate after a stretch of robust job growth that has pushed down unemployment to 5.1%.
The cost of airline tickets, however, sank for the second straight month as some of the savings in fuel have translated into lower prices.
For the first time in seven months, USA consumer prices fell in August, a development experts attributed to the continued decline in gasoline prices along with a strong dollar, CNBC noted.
“In time, a tightening labor market leading to stronger wages will feed through to price growth”, TD Economics economist Andrew LaBelle said in a note to clients.
In the last month, the rental index increased by 0.3%, which matched July’s gain. Electricity prices have been all over the price, but rose slightly in August over the prior month but this is not too out of the ordinary since the summer weather has caused a major spike in usage.
Economists polled by Reuters had forecast the CPI unchanged in August and rising 0.2 per cent from a year ago.
Egg prices are now up 35.3 percent from a year ago, following the avian flu that struck some parts of the country early in the year. The “Kiwi” was also boosted by hopes that this afternoon’s dairy auction will lead to another rise in milk prices. Average hourly earnings, adjusted for inflation, rose 0.5%, the biggest jump since January.