A trader works on the floor of the New York Stock Exchange shortly before the end of the day's trading. (Photo : Reuters)
Consumer prices in the United States once again rose despite the significant drop of airline fare and gasoline price. The US Federal Reserve still plans to raise interest rates before the end of the year.
RBS chief economist Michelle Girard told Reuters, "Fed officials made clear that they do not need to see higher inflation before hiking. They just need to have reasonable confidence it will return to mandate."
The US Labor Department released a statement on Aug. 19 stating that the Consumer Price Index edged up by 0.1 percent in July. The recent rise in the Price Index marks the sixth consecutive monthly increase.
The now stable labor market and housing sector both contributed to further strengthen the US economy. Industry experts said that this stable market should be able to help the US central bank achieve its two percent growth target.
On the other hand, hourly wages are still rising. Reports claim that a rise the current hourly wage is 1.9 percent higher compared to that in 2014. Economists said that this trend limits the ability to spend more, despite of the recent fall in the price of fuel.
The deterioration of demands not only in the US but also in China and Europe is considered as one of the main driving force in stopping inflation. On top of that, the massive decline of gasoline prices also has a major effect in the global inflation rate.
According to Wall Street Journal, the current price of gasoline is 22 percent lower compared to its price in 2014.
