Inflation turns on global economy
A person buys gallons of milk, frozen orange juice, eggs and beans at a Safeway grocery store in Washington, DC.
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KAI RYSSDAL: Inflation numbers came out this morning and yesterday. Both business prices and consumer prices -- the ones you and I pay at the shopping mall -- actually went down in August. The Labor Department says it's the first decline in inflation since October. Wall Street is cheering -- but certain prices are sky rocketing. And some economists say the rest could soon follow. Jill Barshay reports.
Jill Barshay: Take a quick glance at the August inflation numbers, and you might think that prices are quite stable. Inflation's hovering a little over 2 percent a year. But peek under the surface of those numbers and it's clear Americans have had a bumpy ride recently.
Consumers saw unusual price swings in August -- that's according to Joel Naroff. He's the chief economist at Commerce Bank.
Joel Naroff: We have things that are really, really wild -- you have food up sharply, you have medical care up sharply, but then you have clothing down and you have gasoline prices that fell. You have education costs up and computer costs down.
Oil is now surging above $80 a barrel. Naroff says that's likely to push prices up a bit next month. But he doesn't expect a big burst of inflation.
Naroff: We have businesses around the world who are selling into the U.S., and they want to sell their goods -- so they are keeping their prices low. And that's preventing American businesses from raising their prices. And it's this global economy that has really changed inflation.
Robert Stein is a senior economist at First Trust Advisors. He thinks rising oil prices will do much more damage.
Robert Stein: Oil is going to cost more, and the things we import are going to cost more -- and that drives inflation upwards.
Stein predicts the combination of a weak dollar and expensive oil will send inflation to 4 percent by the end of the year -- that's more than double the rate that the Fed likes, and higher than it's been in years.
In New York, I'm Jill Barshay for Marketplace.