Europe South Asia Asia Pacific Americas Middle East Africa BBC Homepage World Service Education

Front Page



UK Politics







Talking Point

In Depth

On Air

Low Graphics

Wednesday, November 17, 1999 Published at 14:24 GMT

Business: The Economy

US inflation still subdued

Prices of clothing surged - but everything else stayed moderate

US inflation continued at a moderate pace in October.

Prices rose by only 0.2% in October, compared to the previous month. And the core rate, excluding more volatile food and energy prices, was also 0.2%.

That was lower than the increase of 0.4% in September, and better than the average of 0.3% for the year.

On a yearly basis, the core US consumer price index (CPI) rose 2.1%, while the overall index was up 2.6%

The figures matched the expectations of most economists, which reassured the financial markets.

"This is a market friendly CPI number. The Fed is not behind the curve. There is nothing in the report that reverses the (low inflation) trend," said Peter Kretzmer of Banc of America.

No more rate rises?

The modest pace of inflation suggests that there may not be any more interest rate increases by the US central bank, the Federal Reserve.

On Tuesday the Fed raised US interest rates by 0.25% to 5.5%, saying it was worried about the booming economy and the tight labour market.

But it also said that it was returning to a neutral bias, suggesting that it may not move again on interest rates for several months.

There are still fears that higher commodity prices will help push up inflation.

Oil prices have more than doubled since their low of $10 a barrel last year to nearly $25 a barrel now.

In October, however, neither fuel and energy prices showed big increases. Energy prices actually fell 0.1%, as the summer driving season ended, while food was up a modest 0.2%.

Clothing prices rose sharply however, at the beginning of the autumn season, increasing by 0.6% for the month.

"This is going to be very beneficial for the market today. This neither confirms nor denies that the Fed did the right move yesterday, but this confirms the declining trend (in inflation)," said Art Hogan of Jefferies & Co.

Advanced options | Search tips

Back to top | BBC News Home | BBC Homepage | ©

The Economy Contents

Relevant Stories

16 Nov 99 | The Economy
US Fed raises rates

16 Nov 99 | The Economy
World growth accelerates

15 Nov 99 | The Economy
US dream scenario continues

05 Nov 99 | The Economy
US wages steady despite jobs record

19 Oct 99 | The Economy
US prices creep up

Internet Links

US Department of Labor

The BBC is not responsible for the content of external internet sites.

In this section

Inquiry into energy provider loyalty

Brown considers IMF job

Chinese imports boost US trade gap

No longer Liffe as we know it

The growing threat of internet fraud

House passes US budget

Online share dealing triples

Rate fears as sales soar

Brown's bulging war-chest

Oil reaches nine-year high

UK unemployment falls again

Trade talks deadlocked

US inflation still subdued

Insolvent firms to get breathing space

Bank considered bigger rate rise

UK pay rising 'too fast'

Utilities face tough regulation

CBI's new chief named

US stocks hit highs after rate rise

US Fed raises rates

UK inflation creeps up

Row over the national shopping basket

Military airspace to be cut

TUC warns against following US

World growth accelerates

Union merger put in doubt

Japan's tentative economic recovery

EU fraud costs millions

CBI choice 'could wreck industrial relations'

WTO hails China deal

US business eyes Chinese market

Red tape task force

Websites and widgets

Guru predicts web surge

Malaysia's economy: The Sinatra Principle

Shell secures Iranian oil deal

Irish boom draws the Welsh

China deal to boost economy

US dream scenario continues

Japan's billion dollar spending spree