Inflation becomes again normal

Publié le par Jean-Pierre Chevallier

Inflation becomes again normal in the United States: the PCE-PILFE returned in the standards, well installed under the bar of 2%.
Graph 1: http://s3.archive-host.com/membres/up/2107676425/20070928US3PCE01.gif

The PCE-PILFE of August increased by 1.76% year-on-year, against 1.91% in June and July.
The trend is good.
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Core inflation must imperatively remain in the band from 1 to 2% without reaching these limits, which was carried out from 1996 to 2003 thanks to the monetary policy followed by the Fed.
Graph 2: http://s3.archive-host.com/membres/up/2107676425/20070928US4PCE84.gif

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The inflationary skid which lasted since 2004 is stopped thanks to the maintenance of the rates of the Fed above the neutrality at 4.25%… what causes a deceleration of the growth which is likely to go until a recession.
It is in these conditions that inflation can be controlled.
Inflation should not go down under the floor from 1% because the risks of deflation would be important. It is what occurs to Japan for some years.
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PCE-PILFE: Personal Consumption Expenditures: Chain-type Price Index Less Food and Energy.
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