Page 7 - Aruba Today
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U.S. NEWS A7
Wednesday 18 November
LIFE is Beautiful
Coffee - Kitchen - Drinks
Gain in consumer prices could keep a Fed rate hike on track
JOSH BOAK cent from September, the A customer refuels her car at a Costco in Pittsburgh. U.S. consumer prices rose modestly in Octo-
AP Economics Writer largest monthly increase
WASHINGTON (AP) — The recorded for this category. ber, 2015 as low gasoline costs and a strong dollar have suppressed inflation. The Labor Depart-
costs of food, gasoline, Airline fares soared 1.5 per-
shelter and medical care cent in the past month. ment says the consumer price index rose 0.2 percent last month after falling in September and
rose last month, a sign that Much of the inflation within
consumer inflation may the economy stems from August. Gas costs increased 0.4 percent in October but have plunged 27.8 percent over the
be moving up toward the higher rents and home val-
Federal Reserve’s target ues. past 12 months. (AP Photo/Gene J. Puskar)
level and keeping the Fed Shelter accounts for roughly
on track to raise short-term a third of the index. Housing
interest rates from record costs increased 0.3 percent
lows next month. in October and 3.2 percent
The consumer price index in the past year.
rose 0.2 percent in Octo- Fed officials have been
ber after falling the prior carefully monitoring the
two months, the Labor De- economy for an upturn in
partment said Tuesday. The inflation as part of its plan to
average retail gas price eventually raise short-term
rose 0.4 percent, though it interest rates from historic
remains 28 percent below lows.
last year’s level. The U.S. central bank tar-
“October’s inflation num- gets inflation at 2 percent,
bers are just the sort of con- enough to encourage a
firmation the Fed is looking healthy level of consumer
for that domestic strength spending while also ward-
is generating inflationary ing off risks of deflation that
pressures,” said Leslie Pres- could cause the economy
ton, an economist at TD to stall.
Bank. Despite last month’s The unemployment rate
acceleration, inflation has has improved to a healthy
been held in check over 5 percent, compared to 5.7
the past year, causing the percent a year ago. The
Fed to put off a rate hike strong job market has tradi-
as it weighed the poten- tionally justified higher Fed
tial expense to economic rates, except that the level
growth. Americans have of inflation associated with
been shielded from infla- a stable economy has yet
tion largely because of low- to materialize.
er energy prices coupled As a result, Fed policymak-
with a strong dollar that ers have continued to hold
has made imports such as the key federal funds rate
clothes and cars less ex- — the interest banks charge
pensive. The overall con- each other overnight — at
sumer price index has risen the near-zero levels set dur-
a mere 0.2 percent from ing the financial meltdown
a year ago. But core infla- in 2008.
tion, which excludes vola- The Fed’s preferred mea-
tile food and energy prices, sure of inflation, personal
advanced 0.2 percent from consumption expenditures,
September and 1.9 percent has less of an emphasis on
from a year ago. housing costs and has risen
Clothing and shoe ex- just 0.2 percent from a year
penses fell in October, as ago. Global economic
did prices for new autos. pressures are also damp-
But grocery shoppers paid ening inflation. The dollar
more for bread, bacon, has appreciated against
chicken, turkey and fruits foreign currencies such as
and vegetables increased the euro, making imported
last month. The cost of hos- goods cheaper for con-
pital services shot up 2 per- sumers and businesses.q
