US economy sedate as inflation steadies
Friday 15 August 1997
Shares and bonds both rose in early trading yesterday in response to the data, which prompted one economist to say: "When you wrap it all up, all is well on the American scene. Growth is sedate and inflation is very much in check."
The consumer price index rose 0.2 per cent in July, the Labor Department said. Rises in food, housing and transport costs marginally outpaced a decline in energy costs and the first monthly fall in the price of healthcare for almost 22 years.
The rise in consumer prices was up from June's 0.1 per cent, but it left the increase for the first seven months of the year at just 1.5 per cent, less than half the rate of growth recorded in 1996.
Separately, industrial production slowed to a 0.2 per cent increase in July from June's 0.3 per cent rise. The fall followed figures earlier in the week showing producer prices falling for the seventh month in succession, the first time that had happened since 1931.
The pressure on interest rates was also eased by a large build-up in inventories, which rose in June for the sixth consecutive month.
The 0.7 per cent increase was the largest rise since April 1995 and is expected to lead to a slowing in economic activity in the second half of the year as unsold goods are pushed through the system.
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