St. Petersburg Times
Online: Business
Print storySubscribe to the Times

Heads up

Tuesday brings snapshot of inflation

By Times Staff Writer
Published August 16, 2004

Is inflation heating up or cooling down? We'll get a few more clues Tuesday when the Labor Department releases the Consumer Price Index for July.

Rising gas prices have been the biggest contributor to inflation so far this year, with smaller contributions from food, housing and medical care. With gas prices declining recently, the overall CPI could be down from the June level of 0.3 percent.

However, energy costs haven't stabilized yet.

"Energy prices, if large and sustained, tend to bleed through to other sectors over time," Raymond James economist Scott Brown said in his economic commentary last week. He said slower growth in productivity also is putting pressure on labor costs.

The "core" rate of inflation, which leaves out food and energy prices, fell a tenth of a percentage point each month for the past four monthly CPI reports. Economists are not expecting that downward trend to continue. The most common forecast for July is a rate of 0.2 percent, up from the June rate of 0.1 percent.

The Federal Reserve Board said last week that it expects inflation to be relatively low, but plans to continue raising short-term interest rates to make sure it stays that way. The Fed's Open Market Committee raised the federal funds rate a quarter of a percentage point, its second tightening move after four years of declining rates.

Higher rates make it more expensive for businesses and consumers to borrow money, which means they spend less. Reduced demand slows the economy and helps keep prices in check.

[Last modified August 14, 2004, 00:24:12]

  • AmSouth exec sees growth ahead
  • Lessons towns can learn from Sykes' downsizing

  • Business briefcase
  • This week
  • Calendar
  • Companies
  • People

  • Heads up
  • Tuesday brings snapshot of inflation

  • Profile
  • Tom Feazel

  • Talk of the bay
  • Bank behind new magazine, at least for first issue
  • Bay area to learn of credit union's new name in October
  • Dade City: home of banking leaders
  • Florida downtowns get a boost
  • Furniture chain to expand presence in bay area

    Back to Top

    © 2006 • All Rights Reserved • Tampa Bay Times
    490 First Avenue South • St. Petersburg, FL 33701 • 727-893-8111