"This is probably going to be a little bit comforting for some of the folks at the Fed who are worried about lower inflation,"
- Omair Sharif, an economist at RBS Securities Inc.
The cost of living in the world's largest economy rose last month, at the fastest pace in four month, while confidence among American homebuilder jumped to the highest level since January 2006. A report from the Labor Department showed that the consumer-price index increased 0.5% after a 0.1% gain in the prior month, outpacing analysts' expectations of a 0.3% rise. Almost two-thirds of the gain in the CPI accounts gasoline prices, which advanced the most in four months. At the same time, core inflation, which does not take into account food and fuel, edged higher 0.2%, meeting May's gain and the survey median. On an annual basis inflation is up 1.9%, nearly in line with the Fed's 2.0% target.
Also Tuesday the National Association of Home Builders unveiled their gauge of confidence among the nation's homebuilders, which advanced for the third month in a row. The index now stands at 57, up from 51 in June, and 6 points above the estimates. After reaching a low of 8 in January 2009, the index has been steadily improving, and even moved into a positive territory- above 50, for the second consecutive month. Healthy level of inflation, stable improvement in housing market may push the Federal Reserve to start tapering its quantitative easing programme in September, in line with analysts' forecasts.
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