Inflation Data Disappoints

David O'Malley

By David O'Malley | October 16, 2017

The Consumer Price Index (CPI) increased by 0.5% for the month of September but was lower than expected. Despite a tight labor market, strong economic conditions and increasing commodity prices, inflation has remained lower than expected throughout 2017. Further, CPI has been lower than its expectations in six of the last seven months.

Other economic indicators continue to show strength and support further gains in the economy. Later this week I will be watching Janet Yellen’s speech for any clues on the Federal Reserve’s (Fed) thoughts about longer term inflation expectations. This environment of economic strength and low inflation continues to support equity prices reaching new highs. As a result, I expect third quarter earnings to exceed market expectations.

 

 



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This blog post is for informational use only. The views expressed are those of the author, Dave O’Malley, and do not necessarily reflect the views of Penn Mutual Asset Management. This material is not intended to be relied upon as a forecast, research or investment advice, and it is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy.

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