July Consumer Prices Unchanged as U.S. Pricing Power Wanes

The cost of living in the U.S. was little changed in July for a second month, showing companies lack pricing power. The unexpected reading in the consumer-price index capped a 1.4 percent gain over the past 12 months, the smallest year-to- year increase since November 2010, the Labor Department reported today in Washington. The median forecast of 85 economists surveyed by Bloomberg News called for an increase of 0.2 percent. The core index, which excludes volatile food and fuel costs, rose less than forecast. Companies may find it difficult to charge more while joblessness hovers above 8 percent. Tempered inflation makes it possible for Federal Reserve policy makers to take additional steps if needed to revive the economic expansion when they meet next month. “The fact that the economy was so weak in the first half of the year means there’s probably less pricing power,” said Omair Sharif, U.S. economist at RBS Securities Inc. in Stamford, Connecticut. “It’s going to be tough to push prices through to the consumer who’s already very weak and shown an appetite for discount shopping,” said Sharif, who correctly forecast the increase in core prices.