The US gas price has reached a new record which means the consumer prices are as low as they were six years ago in November. The recent price drops could influence the Federal Reserve to start raising the interest rates starting with the second half of 2015.
The Labor Department announced today that the Consumer Price Index dropped to 0.3%, making it the biggest decline since December 2008. The Consumer Price Index has been flat all through the month of October.
The Consumer Price Index increased by 1.3% for 12 months until November, which is the smallest gain since February. The index advanced in October by 1.7%.
Economists expected the Consumer Price Index to drop only 0.1% from October. They also said that Federal Serve officials didn’t know anything about it either when they discussed the issue in a two-day meeting.
Jay Morelock, an economist working for the FTN Financial in New York, said that recent inflation report might not influence the Federal Reserve decision.
The inflation is running below the 2%, which represents the target of the US central bank. The job growth has continued to improve lately and the overall US economy is starting to heal itself after the Recession injuries.
Also, the Labor Department released a report about the US average weekly earnings, which have been adjusted for the inflation, and the report shows that it has reached the biggest gain in more than six years.
Many economy experts expect the Federal Reserve officials to increase the interest rate somewhere in mid-2015.
The US stocks traded higher and the prices for the Treasury debt dropped. Also, the dollar has witnessed a rise against several currencies, as of late.
The recent dropping oil prices and the strong dollar are currently curbing inflation. The unemployment rate has fallen to 5.8% and the average price of an oil barrel has dropped below $56 after being as high as $107.
The average US gas price has dropped on a national level to $2.53 per gallon from $2.89, as it was last month.
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