CPI Shows Inflation May Be a Bigger Problem than the Fed Thinks It Is

A hodge-podge of government reports released Friday has rekindled debate amongst economists over a question central to the future of the U.S. economic recovery:  Is inflation slowly on the rise, or is deflation about to sink prices and future growth? The consumer price index (CPI) rose for the first time in four months in July, signaling higher prices in some sectors and easing concerns that a slowdown would sink the U.S. economy into deflation.  Meanwhile, the government released a string of weak economic reports that point to slower economic growth. The consumer price gauge increased 0.3%, the most in a year , outpacing the 0.2% gain projected by the median forecast of economists surveyed by Bloomberg News , figures from the Labor Department showed Friday. The so-called core rate favored by government economists, which excludes volatile food and fuel costs, met expectations, increasing 0.1%.