Saturday, 16 December 2006

Looking a little more like Goldilocks

Reuters reports the latest data from the US.

U.S. consumer prices held steady in November, confounding expectations of a small rise, as energy and vehicle costs dropped, according to a government report on Friday that eased inflation worries...

Consumer prices and core consumer prices were also lower than expected over 12 months. Consumer prices rose a less-than-expected 2 percent over 12 months while core consumer prices rose 2.6 percent from November a year ago...

Industrial production rose 0.2 percent in November on gains in manufacturing, but that was after a revision showing output had been weaker in October than originally reported. Industrial capacity use was unchanged last month, the Federal Reserve said.

To add to the positive mood, Reuters also reports that the Economic Cycle Research Institute's Weekly Leading Index rose to 140.8 -- a record high -- last week, with annualised growth rising to 2.8 percent from 1.8 percent.

But before we get carried away with the benign inflation data, note that the Federal Reserve Bank of Cleveland reports that the median consumer price index, its measure of core inflation, rose 0.2 percent in November and 3.0 percent annualised. And even with the conventional measure of inflation, James Picerno at the Capital Spectator reminds us that a similar decline in inflation in the spring of 2005 proved "fleeting".

Nevertheless, inflation has indeed been low worldwide. Eurozone inflation was also zero in November, although annual inflation accelerated to 1.9 percent from 1.6 percent in October.

And to add to the euro zone's dilemma, industrial production in the area decreased 0.1 percent in October, although it was up 3.6 percent from the previous year.

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