The U.S. Is Flirting With Deflation Even If Energy And Food Prices Are Rising

The U.S. consumer price index for August came in pretty much as expected with a 0.3-per-cent gain, but the big news was the flat reading on the “core” index (which excludes food and energy). This is the metric that the markets and central banks focus on since food and energy tend to be volatile and related more to periodic supply factors than fundamental demand factors.

This CPI core index has now been at 0.1 per cent or below for nine of the past last 10 months and the year-over-year trend, at 0.9 per cent, has been below 1 per cent for five months running. Historically, back to 1957, I can only see this sub-1-per-cent trend happening for this long in 1960 – when the U.S. economy was in recession.

Read the full story at The Globe and Mail >

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at