Core Prices Remain Largely Unchanged
|Written by David Rosnick|
|Friday, 17 September 2010 10:30|
Transportation contributed greatly to measured inflation with a 1.2 percent increase, but most if not all of the increase is attributable to fuel prices. In August, the price of gasoline rose 3.9 percent. Even though gasoline prices experienced a 4.1 drop in June, prices have risen at a 16.2 percent annualized rate since May.
All major categories of imports and non-agricultural export prices showed accelerating inflation, which is consistent with a falling dollar. Imports become more expensive as the real price of dollars declines relative to other currencies, leading to a decline in purchasing power. On the flip side, exporters may demand additional dollars for their goods even as the prices of exported goods fall in other countries. These seemingly contradictory effects have progressed since the real dollar began declining in early 2002—following a large run-up which began in the mid-1990s.
For more information, read the full Prices Byte.