Inflation Moves Closer to Zero

By Andres Carbacho-Burgos in West Chester 10/30/2009

The personal income and price news for September held few surprises; as income stayed level, consumer spending fell after the expiration of the cash for clunkers subsidy, and top-line inflation fell slightly while core inflation remained low and level. The top-line PCE deflator increased by 0.1% in September compared with a 0.3% increase in August and is now 0.5% below its level in September 2008 despite recovering gasoline prices. Gasoline prices have recently reached a 2009 high, though they are still at a low level in comparison with last year's peaks. Year-over-year inflation in November will be higher due to the drop in energy prices that took place in the same month last year....

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