Friday, September 17, 2010

Inflation rate increases 0.3% in August

Interesting, food and energy prices are increasing.  Look how the Core CPI is calculated.
Rising energy and food prices were the biggest drivers, with gasoline rising 4.1% over the last year and food rising 1%. Overall, the entire energy index -- which includes fuel, electricity and gas utilities -- rose 3.8%.
Stripping out the volatile food and energy component though, the so-called core CPI remained unchanged, showing prices rose 0.9% over the last year.
 So, the inflation rose at a very slow rate only if you stripped out food and energy.  Another reason why the core is decreasing is that rent has been decreasing.  Housing costs are determined by rental rates not mortgage costs.
For the month of August, overall prices were up 0.3%, in line with the 0.3% increase in July. Economists surveyed by were expecting a 0.2% increase during August.
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