MercoPress. South Atlantic News Agency

US retail prices rise

United States retail prices in June rose 0,2%, but if volatile items such as food and energy are excluded, inflation remained flat.

The US Labour Department release indicates that retail prices increased 2,1% in the last twelve months, but if fuel and food are not included, the 12 month index rose 1,5%. In the first six months of 2003 retail prices increased at an annual 2,2% rate, and excluding fuel and energy, 0,9%.

Actually the annualized index is similar to that of last April and the lowest since 1966. The retail price index last June was the first to increase in the last three months: in May it remained unchanged and in April it actually dropped 0,3%.

Last April the US Federal Reserve publicly expressed concern about deflation reaching the US economy, a general drop in prices that further retracts consumers and investors from spending. But in its last hearing before Congress this week, Fed Reserve chairman Alan Greenspan said the US central bank was alert "to impede inflation from dropping too low"

The sluggish growth of the US economy has also seen unemployment reach its highest level in nine years, 6,4%, and the number of jobless receiving subsidies the largest in twenty years.

With record budget and current account deficits plus a massive tax cut program to stimulate the economy, the US dollar consistently dropped in the last twelve months making foreign analysts believe that the President Bush administration was involved in a deliberate "weaker dollar" policy.

However US Treasury Secretary John Snow visiting Britain and Germany stressed the contrary. "We have a strong dollar policy. We believe in a strong dollar", said Mr. Snow in London before meeting with Chancellor or the Exchequer Gordon Brown. When asked about the burgeoning budget deficit, Mr. Snow replied it was "worrisome, but not alarming", adding that the US government is committed to keeping the deficit under control.

In the Congressional hearing earlier this week Mr. Greenspan said that he expected a "more stable fiscal outlook" from bipartisan leaders.