Flat core CPI raises odds of more quantitative easing

The Bureau of Labor Statistics (BLS) reported the consumer price index (CPI) increased 0.3% from July to August on a seasonally adjusted basis (0.1% non-seasonal).

Most interesting was the core CPI, CPI less energy and food, remained flat. Most notable amongst the basket of items was apparel and shelter. These are the only two items that have declined in price over the past 12 months, and their monthly price changes for August were also amongst the lowest, -0.1% for apparel and flat for shelter.

The persistence of these low readings now has analysts speculating that the odds have increased that the Federal Reserve will announce next week a second official round of quantitative easing.

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