Wall Street Journal (02/02/15) Eric Morath
The price index for personal consumption expenditures was up 0.7% in December from the same time last year, the lowest year-to-year increase since just after the recession and the smallest 12-month gain for consumer prices since October 2009, according to the U.S. Department of Commerce. It was the 32nd straight month below the U.S. Federal Reserve’s 2% inflation target. This complicates the decision for Fed officials about when interest rates should be lifted from near zero, although they believe the pullback is transitory.
“Stagnant household incomes have resulted in a lack of demand for retailers and manufacturers,” says Navy Federal Credit Union economist Alan MacEachin. “They don’t have any pricing flexibility.”