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Despite Modest CPI Rise, Deflation Isn't Dead Yet

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DAILY DEFLATION DATAPOINT
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Consumer prices rose by 0.3% in July from June, the Labor Department reported today. That's good news, right? After all, the Wall Street Journal observed, "Deflation? Apparently not in the consumer-price index, which posted its first increase in four months in July." But don't be so sure.

While the CPI did rise marginally in July, we've still gone four consecutive months with sub 1% CPI growth. For comparison sake, the first time that occurred in Japan was May 1994. Look what transpired over the course of the next nine months:

Japan TOPIX Index

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Conor Sen, who noted the moves, said that over that same span 20-year rates in Japan fell 100 basis points.  Despite the modest rise in the CPI it may be a little early to declare deflation dead just yet.
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