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2.7%  Q1 GDP    4.57%  avg. 30-year mortgage     9.5%  Unemployment

August Inflation Rises Slightly More Than Expected

Inflation rose 0.4 percent in August, compared with July, but rose only 0.1 percent if the volatile food and energy costs are taken out, the Labor Department reported moments ago.

Inflation -- as measured by the consumer price index -- dropped 1.5 percent in August compared with August of 2008, and was up 1.4 percent if you take out food and energy costs.

Forecasters expected the overall inflation number would rise 0.3 percent in August, with core inflation -- taking out volatile food and energy costs -- rising 0.1 percent.

The economy could actually use a little healthy dose of inflation to counteract the possibility of deflation, which would be much worse. Though the idea of dropping prices might seem appealing, in deflation, wages fall in lockstep with prices and the economy shrinks. That's what happened in the Great Depression, and it's much more harmful than inflation.

-- Frank Ahrens
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By Frank Ahrens  |  September 16, 2009; 8:43 AM ET
Categories:  The Ticker  | Tags: inflation  
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If I am to buy a home next year when my lease runs out, I could use some deflation. My social security will not go down, nor will my annuities.

Some of us are in different boats and we sink or go up on our own tides.

Posted by: GaryEMasters | September 16, 2009 10:20 AM | Report abuse

We need to find new ways to report CPI. 30% of it is rent, but most of the population does not rent and most who do not move do not get rent decreases.

Moreover, we need age specific figures. Electronics prices go down, controlled for quality, while medical costs soar. This combination has radically different implications for 20 year olds and 70 year old, all the more so since 20 year olds rent and 70 year olds usually have their own house.

CPI reporting is manipulated for political effect. Thus people today emphasize the negative growth in overall inflation, not the rise in core, the reverse of what happened when raw inflation was soaring.

Posted by: jhough1 | September 16, 2009 11:44 AM | Report abuse

The SOLE reason prices are rising is because the monopoly money printed by the Robber Baron Bankers at the Federal Reserve have almost no value.
Get Rid of The Fed.
And jail the traitors running this great scam on America.

Posted by: brattykathyi1 | September 16, 2009 11:49 AM | Report abuse

An economy built with a deck of cards is sure to collapse. Why not be honest and admit we are in a depression and cut back on our expenditures?

Obama is engaged in two very costly wars:
1. The War in Afghanistan
2. The War on Drugs

Both wars are fundamentally wrong and are destroying our economy, our international reputation, and killing our citizens. The War on Drugs is responsible for 13,500 Mexican deaths since President Felipe Calderon took office. How many civilians have we killed in Afghanistan?

Posted by: alance | September 16, 2009 4:38 PM | Report abuse

... and yet there are no signs of inflation. Remember when there were no signs of a recession? Let the same old game begin anew.

Posted by: whocares666 | September 16, 2009 6:13 PM | Report abuse

"The economy could actually use a little healthy dose of inflation to counteract the possibility of deflation, which would be much worse."

I find statements like this ludicrous in the extreme. Not everyone would be hurt by deflation. Not everyone would be helped by inflation. Whether it helps or hurts depends on your assets (savings) versus liabilities (debts). When the Fed engineers inflation it helps some at the expense of others. There is no "better" here unless you have a value judgement as to who you want to be on the losing end of it. Ask the Chinese if they'd like to see a "healthy dose" of inflation. Stupid.

Posted by: johnbowers | September 16, 2009 6:58 PM | Report abuse

Welcome to the Depression Kids.
It is going to get a lot worse now as inflation soars.

Posted by: dottydo | September 16, 2009 7:17 PM | Report abuse

Wages have already fallen via unemployment, reduced hours, or salaried employees working longer for the same money (good slaves) to keep their jobs.

Heads I win, tails you lose...

Posted by: dlkimura | September 16, 2009 9:09 PM | Report abuse

There many shoes yet to drop. Commercial real estate will hammer many banks. The president concentrating on costly government interference in people s lives, will cause many business to hold back until the dust settles. Insulting the Chinese while they support our spending spree. At some point the world will realize it doesn't need the US to do business. That will be a day of reckoning. Inflation will soar. Things are not rosy. Gold look to rise as a store of value. The sock market isn't investing, it is a gambling casino.

Posted by: wodon1836 | September 16, 2009 9:54 PM | Report abuse

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