U.S. Outlook: Inflation pressures moderate, but for how long?
Recently released U.S. inflation data appear to support the Federal Reserve’s decision to pause in their interest rate hiking campaign. Overall consumer price inflation slowed to a modest 1.5% in February, down from 2.9% in June 2018.
Much of the moderation in the headline rate over the past year has been due to declines in energy, transportation, and apparel prices. Core consumer prices, which exclude the volatile food and energy components, rose 2.1% in February, down from 2.3% late last year.
For more on this, see highlights of my report below, followed by a link to the full U.S. Outlook, delivered on March 15.Key observations:
- Annual producer price growth was as high as 2.8% in mid-2018, but has been trending down ever since.
- Average hourly earnings increased 3.4% from a year ago in February, a post-recession high and a sharp jump from 2.3% growth back in October 2017.
- Slower economic growth in 2020 is expected to begin pushing consumer inflation back below 2.0% yet again.