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FT.com / World / US & Canada - Concern as US inflation jumps
Thursday's news of a 0.8 per cent jump in the US consumer price index in July, coupled with a 0.3 per cent increase in the same measure excluding food and energy, could damage - or at least delay - the emerging optimism on inflation.

The recent drop in the price of oil had stoked hopes that inflationary forces could abate more rapidly than previously expected.

This would potentially remove one of the two main threats to economic stability that the Federal Reserve has been trying to balance, along with growth risks, and reduce the pressure from more hawkish members within the US central bank to begin raising interest rates from their current level of 2 per cent.

However, the July data on US consumer prices - which were worse than expected on both the headline and the core measures - suggest inflation will remain a significant source of concern for the foreseeable future.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Thu Aug 14th, 2008 at 07:56:43 PM EST
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Paul Krugman - Op-Ed Columnist - New York Times Blog

Basically, what we're seeing is pure commodity price inflation, with not a hint of a wage-price spiral.



"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Fri Aug 15th, 2008 at 07:55:24 AM EST
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