by Chris Becker
Last night saw the release of the US consumer price index prints for November just before the FOMC meeting and painting a picture of a potential push into deflation for the worlds biggest (2nd?) economy.
The headline inflation rate came in at 1.3% annualised, and 1.7% excluding food and energy, with dropping oil prices obviously helping:
The monthly change was actually negative at -0.3%, and up 0.1% on the food/energy exclusion.
The lack of inflation in an economy that has been juiced by successive rounds of monetary expansion with QE3 finishing last month is telling, and this non-trend gives the Fed no ammunition to even consider raising rates in early or even all of 2015.
This is a worldwide problem with both the European Union and China (let alone deflationary Japan) also range bound and starting to see headline inflation fall:
Deflation is our future and with it, further “unconventional” monetary policy, China’s continued restructuring goosing the commodity complex, and the lack of unified fiscal policy in Europe dragging the whole edifice down.