Inflation basically does not exist

NEW YORK (CNNMoney)

The government reported Wednesday morning that consumer prices have risen just 1.3% over the past 12 months. When you exclude the prices of food and energy, prices were up just 1.7%.

Overall prices fell 0.3% in November, driven largely by the dramatic fall in gas prices. This is the biggest drop in the monthly inflation rate and gas prices since December 2008. Prices actually rose 0.1% last month when you factor out oil and food costs.

Many economists, as well as members of the Federal Reserve, prefer to look at that so-called core number that doesn't take into account food and oil.

The argument is that the prices of food and energy tend to be very volatile because they are largely dependent on commodity prices.

Related: Why oil is scaring the stock market

Others argue that it's silly to pretend that consumers don't spend a lot of money to eat, drink, drive and fuel their homes. So the latest data are yet another sign that consumers may have more money in their pockets.

The rapid plunge in oil and gas prices has been touted as a positive for the economy since consumers may treat it like a tax cut and spend more.

Related: Cheap oil is like a $60 billion tax cut

And with inflation being so low right now, Americans do have more purchasing power. Although average wages are up just 2.1% over the past 12 months, that's still much higher than the increase in consumer prices.

But there are growing concerns that if oil prices continue to slide, economists may have to worry about the threat of deflation ... persistently falling prices that are a sign of an unhealthy economy. When deflation takes hold, consumers tend to hold off on making purchases because they are waiting for prices to fall further.

The Fed will release its latest outlook on inflation at 2pm ET Wednesday. Fed chair Janet Yellen is also holding a press conference, and she is expected to be asked about what the drop in energy prices may mean for the economy next year.

First Published: December 17, 2014: 8:42 AM ET

Anda sedang membaca artikel tentang

Inflation basically does not exist

Dengan url

https://sepakgajah.blogspot.com/2014/12/inflation-basically-does-not-exist.html

Anda boleh menyebar luaskannya atau mengcopy paste-nya

Inflation basically does not exist

namun jangan lupa untuk meletakkan link

Inflation basically does not exist

sebagai sumbernya