European sees negative inflation, US prices still higher

Report on consumer price index for both regions were released today but the results are opposite.  Europe reports a negative inflation of 0.1 percent, the first time since 1996 mainly due to falling energy and food prices.  Excluding both for the core inflation, the number is positive at 1.4 percent.  Bloomberg reports: Energy prices dropped 11.8 percent in June from a year earlier and food prices fell 0.2 percent, today’s report showed. From May, overall prices rose 0.2 percent.

Unemployment is also pushing retailers to cut down on prices in order to boost sales, in effect, reducing their profit margins.  And the alcohol division is no exception. Beer prices, for instance in Netherlands, also dropped for the first time in six years.

Report from Bloomberg HERE.

It is a different story for the US as inflation is still at 0.70%, lower than the 1.5-2% target by the Fed, but higher than the 0.60% expected by economists (surveyed by Bloomberg).  It is a story of rising energy and food prices that brought core inflation, which excludes both in its calculation, to a slower 0.20%. But this might not be for long.  Again from Bloomberg: Declines in consumer spending and business investment are forcing companies to boost incentives or keep a lid on prices in order to move merchandise, and preventing them from passing higher energy costs on to customers. A surge in gasoline costs in recent months is now abating, indicating inflation may moderate as the year progresses.

Energy costs increased 7.4 percent in June. Gasoline prices soared 17 percent. Food prices, however, fell the same 0.20% percent as in May.

The report HERE.

Declines in consumer spending and business investment are forcing companies to boost incentives or keep a lid on prices in order to move merchandise, and preventing them from passing higher energy costs on to customers. A surge in gasoline costs in recent months is now abating, indicating inflation may moderate as the year progresses.
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