The World Economy... - 18/6/2010

US Inflation Remained Benign And The Fed Is In No Hurry To Raise Interest Rates
US headline inflation fell by 0.2% mom in May, compared with -0.1% in April and +0.1% in March. This was the second consecutive month of decline, pointing to easing price pressures, on the back of a sharper drop in gasoline prices, which fell by 5.2% mom in May, compared with -2.4% in April and -0.8% in March. A moderation in the costs of healthcare, education and recreation also helped. These were, however, offset partially by a pick-up in the prices of apparel, while prices of food & beverages and the costs of housing remained stable during the month. Excluding food and energy prices, the core inflation rate, on the other hand, inched up by 0.1% mom in May, after remaining unchanged in the previous two months. Yoy, the headline inflation moderated to 2.0% in May, from +2.2% in April and a peak of +2.7% in December. The core inflation rate, on the other hand, held stable at +0.9% yoy in May, the same rate of increase as in April and compared with a peak of +1.8% in December. The readings suggest that price pressures remain benign in the US, in tandem with the US Federal Reserve’s assessment that substantial resource slack would continue to restrain cost pressures and inflation is likely to be subdued for some time.

The World Economy... - 18/6/2010