The cost of living in the U.S. was little changed in July for a second month, showing companies lack pricing power.
The unexpected reading in the consumer-price index capped a 1.4% gain over the past 12 months, the smallest year-to- year increase since November 2010, the U.S. Labor Department reported today in Washington. The median forecast of 85 economists surveyed by Bloomberg News called for an increase of 0.2%. The core index, which excludes volatile food and fuel costs, rose less than forecast.
Companies may find it difficult to charge more while joblessness hovers above 8%. Tempered inflation makes it possible for Federal Reserve policy makers to take additional steps if needed to revive the economic expansion when they meet next month.
Manufacturing in the New York area unexpectedly contracted in August for the first time since October, indicating factories are cutting back amid the global economic slowdown, another report today showed.
The core CPI climbed 0.1% in July and was up 2.1% over the past 12 months, the smallest year-to-year increase since October 2011.
Energy costs decreased 0.3% from a month earlier, while food prices rose 0.1%.
A worst-in-a-generation drought from Indiana to Arkansas to California is damaging crops and rural economies and could lead to higher consumer costs at the supermarket in the coming months.
Paycheques are failing to keep up with even limited inflation. Hourly earnings adjusted for inflation were little changed in July after a 0.3% increase the prior month, and were up 0.2% over the past 12 months.
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