Analysis and discussion of issues that impact business

This has ramafications in a number of sectors, including that all important one - the pocketbook sector.

Consumer inflation slowed sharply last month as energy prices moderated, brightening prospects for future economic growth.

Will the continued moderation in energy prices make prospects even brighter?

All eyes have been on the latest CPI figures.

The Labor Department reported Friday that its closely watched Consumer Price Index posted a 0.2 percent increase in August, just half of the 0.4 percent rise seen in July.

The improvement reflected a big slowdown in energy costs, which edged up by just 0.3 percent in August after having surged by 2.9 percent in July.

You can almost feel the collective sigh of relief from both consumers and industry.

Outside of the volatile energy and food sectors, core inflation posted a moderate 0.2 percent rise in August.

Both the overall rise in inflation and the increase in core inflation were in line with analysts’ expectations, providing support to their view that a slowing economy is beginning to dampen inflation pressures.

But now that fuel prices have eased significantly, will that mean the economy will again race forward?

The new figures showed that core inflation over the past 12 months has risen by 2.8 percent, the biggest 12-month gain in nearly five years and far above the Fed’s comfort zone of 1 percent to 2 percent price gains in core inflation.

But with energy prices dropping sharply, many believe that will lessen inflation pressures.

The fall in energy prices is expected to provide a boost to consumer spending for the rest of the year, helping to lift overall growth prospects and lessen fears that the current economic slowdown could deepen into something worse.

Well I don't know about you but this consumers' spending is reamaining largely the same. I'm just not giving as much at the pump! But I'm not the only one whose fuel bill is dropping.

Airline fares, which had been rising sharply because of fuel costs, fell by 1.9 percent, the biggest drop since last December.

So, all in all, things are looking better. And that means the Fed will probably hold the line on interest rates. For now.