Sunday, February 21, 2016
Signs of Growing Inflation in Consumer Price Survey
According to this article, their are signs of growing inflation in the United States, even though the prices of oil have declined dramatically, and recently we have risen short term interest rates for the first time in nearly a decade. Inflation rates have risen 1.4% over the last 12 months, and core inflation has risen 2.2% in the last 12 months. Gasoline prices have decreased by 24% over the last year, but housing expenses and medical services have combined to have risen 6.5% over the last year. Prices are also rising in airfare, clothing, and auto. The threats to economic growth are coming from the low oil prices and slowing growth in China and other emerging markets. All this data is making decisions for the F.E.D much harder, as well as making predictions for the F.E.D more difficult.
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I think inflation is increasing mainly because people think that times are good, and there will be a drop soon. I think people are preparing for the future by increasing prices right now, and people will buy goods at a higher price because our economy is doing well. But, there are signs that a drop is coming in the near future, so it is scaring people a bit.
ReplyDeleteI think it is important to take into account that oil prices doesn't affect the U.S. as it would countries like Venezuela or Nigeria, which is why they are experiencing much higher rates of inflation than we do. This goes to show how important having a diverse economy is because when your entire economy revolves around a single commodity, your economy is very vulnerable to change in prices of said commodity. This is another reason why service based economies, like the U.S., in general are more resilient to changes in prices.
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