We had two important economic reports this morning. The first was for consumer price inflation for July.
The Labor Department said its consumer price index was unchanged from June on a seasonally adjusted basis, and that prices this summer were 2.1 percent lower than last July, when soaring oil costs drove gasoline prices to $4 a gallon and lifted the cost of food and other products.
The drop in the last year has been the largest in almost 60 years.
Economists had been expecting no change in the cost of living in July. Excluding volatile food and energy prices, the so-called core rate of inflation rose 0.1 percent, also in line with expectations.
This will allow the Fed to keep interest rates low for an extra long time. The second report noted that industrial production rose for the first time in nine months.
Production from the nation’s factories, mines and utilities rose more than expected in July, with the first gain in nine months driven by increased output from auto companies.
The Fed says industrial production rose 0.5 percent in July, after falling in 17 of the previous 18 months. It marks only the second increase since the recession began in December 2007.
Economists expected a 0.3 percent rise, according to Thomson Reuters.
Automakers led the rebound, as the production of motor vehicles and parts rose 20.1 percent, after falling for three straight months.
General Motors and Chrysler last month reopened many plants that had been closed in May and June as the companies restructured and emerged from bankruptcy protection.
The 2.4% drop in utility output is no big deal. It’s the El Nino weather pattern that causes cool summers and warm winters.