The most recent inflation report from the Bureau of Labor Statistics provides one piece of news above all: The ongoing ultra-loose monetary policy in the USA is still not leading to high price pressure, and the economic problems do not allow this to happen.
In October, prices for goods and services remained unchanged on average compared to the previous month. Although food prices did rise and prices were also raised in individual service and goods categories, there was still no sign of a recovery. However, this was offset elsewhere. For example, gasoline became cheaper, and higher discounts were again granted for clothing and car insurance. The main reason for this is probably the fact that the economy is losing momentum again: As a result, the world market price for crude oil (WTI) in the fall was temporarily somewhat lower than in the summer, and companies were probably confronted with weaker consumer demand.
Compared to the previous year, energy prices put a somewhat stronger brake on the inflation rate in October, while the price pressure on services and industrial goods remained moderate. The inflation rate therefore fell from 1.4 percent in September to 1.2 percent in October, while the core rate (excluding energy and food prices) fell from 1.7 to 1.6 percent at the same time.
Looking ahead over the coming months, we expect the pressure on prices to ease further for the time being in view of the economic difficulties surrounding the corona virus. The current rise in the price of crude oil should be nothing more than a „flash in the pan“. The rate of inflation is not expected to pick up significantly again until spring, albeit mainly due to the statistical basis effect. Until a vaccine is actually available for the general population or a new economic stimulus package is passed, the economic upturn in the USA is unlikely to be too strong in the end.