The lowflation is coming from outside the house.
The US Bureau of Labor Statistics released its latest read on import and export prices, and both are sinking to their lowest levels since the financial crisis.
China’s slowing economy is playing a role (as it does in most things these days). Consumer price inflation there has remained stable, but export-influencing producer prices have been falling on an annual basis for years. And since China is America’s biggest trading partner, that’s weighing on US import costs.
That said, Chinese imports aren’t the only ones getting cheaper. It’s happening to Japan imports, and oil-heavy shipments from Canada and Mexico are hitting bargain-basement prices.
Indeed, falling oil and import prices have continued to throw a wrench into US inflation projections. Federal Reserve chair Janet Yellen said oil prices had stabilized in June, right before they began sinking again. She and the rest of the open markets committee think the effects of cheap energy are “transitory,” though they’ve been saying so since December.