Disinflation Watch

The BLS released its estimates of consumer prices in August. They rose 0.1% in August, as did prices excluding food and energy. Somewhat worryingly, inflation seems to be falling from its already low levels. As I explained in this post last month, this is probably an indicator of weak demand.

The 12-month change in prices is given in the chart below, which I update regularly on this site.

It seems that inflation is definitely falling now. In fact, the BLS report notes that over the past 3 months the core rate of inflation has actually fallen to just 1.0%. While earlier this year it seemed that firms were regaining some pricing power, it now seems that that was just a temporary improvement in demand.