The Bureau of Labor Statistics said that consumer prices were unchanged in July for the second straight month. Lower energy prices helped drag overall costs lower, including reduced prices for electricity and fuel oil. Gasoline prices, though, rose 0.3 percent. Food prices were also higher, up 0.1 percent.

Core inflation, which excludes food and energy costs, rose 0.1 percent in July. On an annual basis, overall and core inflation were 1.4 percent and 2.1 percent, respectively. This suggests a significant easing in inflationary pressures over the past few months, particularly for goods. Prices for goods have risen just 1.2 percent over the past year, down from 2.2 percent in January. A weaker economic environment is clearly restricting price increases for finished goods.

These number mirror yesterday’s producer price data, which also found energy prices easing inflationary concerns. This suggests that core price increases are currently around the Federal Reserve’s stated goal of 2 percent of less. This frees the Fed to continue to promote “exceptionally low” interest rates, as is its current policy, but it might also help ease concerns for those pondering additional monetary policy steps. The Federal Open Market Committee will meet on September 18-19, where it is expected that they will debate the need for another round of quantitative easing.

Chad Moutray is chief economist, National Association of Manufacturers.

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