Inflation tame, housing starts jump

McClatchy Washington BureauAugust 19, 2014 


Construction is under way at Roanoke's new housing development, Fairway Ranch, as seen, Jan. 10, 2014 in Roanoke, Texas.


— Falling gasoline prices helped keep inflation in check during July, the government reported Tuesday.

Headline inflation, as measured by the Labor Department’s Consumer Price Index, rose by 0.1 percent in July and 2 percent year-over-year from July 2013. Of interest to households, however, food prices jumped by 0.4 percent in July and 2.5 percent since July 2013.

“Overall, the consumer inflation story is relatively mild,” said Chris Christopher, director of consumer economics for forecaster IHS Global Insight. “However, the direction of food prices is somewhat worrisome. Lower and middle income households are likely to be paying a larger percentage of their paychecks for grocery bills.”

When the volatile food and energy sectors are excluded from the price index, so-called core inflation rose by 0.1 percent, below the forecasts of most mainstream economic forecasters. The year-over-year rate of core inflation remained unchanged at 1.9 percent.

Gasoline prices for a gallon of regular unleaded gasoline nationally were down almost 14 cents to $3.446 on Tuesday, from $3.584 a month earlier, according to the AAA Fuel Gauge report.

The tame inflation readings give the Federal Reserve more space to maneuver as it prepares to end in October the controversial purchases of government and mortgage bonds. The bond-buying was designed to stimulate investment and economic activity. Both investors in stocks and bonds are fretting the end of a program that’s provided a boost to financial markets.

Fed Chief Janet Yellen is expected to address those concerns when she speaks Thursday about the economy at the annual central bankers’ summer retreat in Jackson Hole, Wyoming.

In another economic data point, the Commerce Department reported Tuesday stronger-than-expected housing starts in July, rising by a strong 15.7 percent to 1.09 million starts from June’s 945,000. They’re also 21.7 percent higher than the same month in 2013.

Building permits also exceeded expectations, rising by 8.1 percent in July and by 7.7 percent from a year earlier.

Email:; Twitter: @KevinGHall.

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