If growth remains well below trend and the euro rises, the average core inflation rate will fall below 0.7% next year.
Economists say subdued demand, which reflects the weak state of the economy, has led to the fall in the core inflation rate.
However, Germany's core inflation rate is only 0.6%, perilously close to deflation.
Core U.S. consumer prices (discounting energy and food) rose a less than expected 0.1% in July, but the core inflation rate was 2.4%.
The recent strong pace of growth in America and the rise in its core inflation rate therefore make a strong case for a rise in interest rates now.
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Mr Koizumi's last months coincide with accelerating economic growth and a definitive end to seven years of grinding deflation in November core prices rose by 0.1%, and a positive core inflation rate for December is also expected to be announced on January 27th.
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The Federal Reserve, which uses the core inflation rate to decide its policy in creating economic conditions that will keep inflation at a low level and create jobs, may be worried now that the consumer now may now begin spending less and saving more as food and gas prices rise.
City economists are also reassured by the fall in the "core" inflation rate in June, from 2.2% to 2.1%.
But the core rate of inflation (excluding food and energy) jumped to 1.6% from 1.2% in February.
But what the Fed is trying to do is say, what's the core rate of inflation that we can actually control with interest rates?
If there is no sign of a rise in the core rate of inflation (excluding energy prices), then there is no need to raise interest rates.
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With inflationary expectations now well anchored just below 2% and the core rate of inflation at 1.6%, there seems little danger of inflation surging out of control.
Wesbury would like to see the federal funds rate at a "neutral" 6.5% or so. (Neutral is the GDP growth rate plus core inflation.) Me?
The core rate of consumer-price inflation (excluding fresh foods) turned positive (0.1%) in the 12 months to November.
But the low rate of so-called "core inflation" was welcomed by Wall Street with both bonds and shares rising.
While core inflation is running higher lately, forward-looking indicators suggest a slowdown in the inflation rate.
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The zone's headline inflation rate has stayed stubbornly above 2% in the past year, although core inflation (which excludes energy and food) is now 1.8%.
Year-over-year inflation was just 1.7%, while the core (ex-food and energy) rate was only 1.9%.
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