US consumer price inflation rose slightly to 0.2 per cent in July, up from a 0.1 per cent increase in June. Core inflation - excluding volatile energy and food prices - rose at the same rate. Inflation is running at an annual rate of 1.5 per cent for the first seven months of the year, down slightly from 1.7 per cent for all of last year, with the core rate at 2.4 per cent compared to 2.2 per cent in 1997.
The Federal Reserve Open Market Committee met yesterday to examine US monetary policy, but left interest rates unchanged as they have been since March 1997. The US economy shows no signs of descending into an inflationary spiral, despite several years of strong growth. Expansion has moderated in the second quarter of this year, as the impact of slower growth and currency depreciation in Asia starts to hit the world economy.
The US trade deficit with the rest of the world has soared as exports have declined, but the trade deficit for June fell slightly, the government said. It stood at $14.14bn (pounds 8.7bn), down nearly 9 per cent from a revised $15.54bn the month before. However, for the year as a whole the trade deficit looks to be heading for a record $158bn, up from $110bn last year, as exports to Asia plunge. The deficit for the second quarter of the year was a record $44bn; the last quarter anywhere near this high was at the end of 1987.
A combination of relief at President Bill Clinton's decision to confess to a sexual relationship with Monica Lewinsky and healthy statistics led Wall Street higher. The Dow ended at 8,714.65, up 139.8 points. Encouraging corporate profits at Hewlett Packard, defying warnings of sharply lower earnings, also boosted the market.