Bloomberg | Mar 13, 2018 01:30PM ET
(Bloomberg) -- Weakness in the guts of Tuesday’s U.S. inflation report suggests the real inflation scare, at least for central bankers, may be the prospect of softening price pressures, rather than the fears of an acceleration that gripped Wall Street last month.
So-called “procyclical inflation,” which denotes changes in the prices of goods and services that in the past have tended to be more sensitive to labor-market conditions, moderated in February to the lowest level since December 2015, according to data from the Labor Department report compiled by Bloomberg. (Federal Reserve Bank of San Francisco economists popularized the term in recent research.)
Housing rents were at the forefront of the deceleration, but club membership dues and fees, television and radio service subscriptions, prescription drugs, sporting goods and hotel rates put big dents in the procyclical basket.
Core inflation, which includes all items except food and energy, ticked up to 1.85 percent from 1.82 percent despite the underlying deceleration in procyclical inflation. Large jumps in the price indexes for so-called “acyclical” items like apparel, motor vehicle insurance and household operations -- a category that includes things like moving expenses and repair of household items -- helped support it.
Federal Reserve officials forecast inflation will get close to their 2 percent target this year as low unemployment puts upward pressure on wages, and ultimately, on prices. Inflation unexpectedly decelerated in the first half of 2017 -- despite a strong job market -- after briefly popping above 2 percent at the start of that year, and a big decline in the price of cell-phone service last March has been a favorite culprit of policy makers.
Core services inflation excluding cell phones, however, declined in February to the lowest level since August 2015.
Written By: Bloomberg
Fusion Media will not accept any liability for loss or damage as a result of reliance on the information contained within this website including data, quotes, charts and buy/sell signals. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible. Currency trading on margin involves high risk, and is not suitable for all investors. Trading or investing in cryptocurrencies carries with it potential risks. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Cryptocurrencies are not suitable for all investors. Before deciding to trade foreign exchange or any other financial instrument or cryptocurrencies you should carefully consider your investment objectives, level of experience, and risk appetite.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures), Forex and cryptocurrencies prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn’t bear any responsibility for any trading losses you might incur as a result of using this data.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.