Thursday, 17 January 2008

Inflation remains a bit hot

Reuters reports yesterday's economic reports from the US.

The Labor Department said on Wednesday its Consumer Price Index rose 0.3 percent in December, less than half November's 0.8 percent jump. For all of 2007, the CPI rose 4.1 percent, well ahead of 2006's 2.5 percent gain and the steepest since 1990.

The Fed will take comfort from the fact that core CPI inflation moderated slightly.

... The so-called core CPI, which strips out volatile food and energy items, was up 0.2 percent in December after a 0.3 percent November increase, which some analysts said was a reassuring sign that price pressures might be easing, even if it was running a bit hot for some Fed policy-makers.

And a slowing economy should keep inflation in check.

Separately, the Federal Reserve said output by the nation's mines, factories and utilities was flat in December and in 2007 posted its weakest gain since 2003...

The Fed's latest Beige Book, an anecdotal summary of conditions across the country, found the economy was still growing in the final weeks of 2007 but at a weaker pace and with signs of rising stress among consumers...

The NAHB/Wells Fargo Housing Market index rose 1 point from December to 19, with builders citing a glut in homes for sale and tight financing conditions...

Meanwhile, inflation in the euro zone in December was confirmed at 3.1 percent yesterday.

In the UK, inflation looks unlikely to moderate very soon after figures yesterday showed wage growth held firm at the end of last year and the number of people claiming jobless benefit fell to its lowest since 1975. On Tuesday, the UK had reported that consumer prices rose 0.6 percent in December, the biggest monthly gain in a year, leaving the annual rate at 2.1 percent.

And from New Zealand today comes news that inflation accelerated in the fourth quarter, with consumer prices rising 1.2 percent from the third quarter.

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