Inflationary signals

Date posted: January 16, 2012

Next to jobs, inflation is perhaps the biggest economic concern of households. Do recent statistics indicate we have anything to worry about with inflation? N.C. State University economist Mike Walden responds.

“Well, inflation is always an issue here … . And, and let me be clear here. When we talk about inflation and whether we’re worried about it or not, we’re talking about the rate at which prices increase. Now many people would say, ‘Well, I don’t care if inflation’s only 1 or 2 percent. I want prices to go down where they were 5 or 10 years ago.’ Unfortunately that’s probably not in the cards for the average level of prices and the average level inflation.

“So, we are talking about increases, but the good news is after a scare earlier in 2011 in terms of some very high rates of inflation on some monthly basis, we’ve actually seen the inflation rate come down. If we look, for example, at the overall retail inflation rate, the so-called Consumer Price Index, it’s actually been very volatile. We’ve had some months where on an annual basis, it’s above around 10 percent. Other months — like November — where it actually went down, and, of course, what’s happening here … it’s being driven primarily by fuel prices. And those months where we have a spurt in gas prices, for example, that overall rate goes up — and vice versa when gas prices go down.

“But still if you look at an average, it’s the inflation rate, even at the total level, is rather benign. And that’s one reason why … some economists like to look at what we call the core inflation rate, which takes out fuel and food prices. It has been very well-behaved. It has an inflation rate that’s running in the 1 to 2 percent range. So, right now among all of our economic problems, inflation is probably not high on the radar screen.”

Be Sociable, Share!

Category:

Tags: ,

Comments are closed.

Privacy Statement | University Policies | Contact