US inflation: flat, historically low, and still below the Fed’s target

By Ben Walsh
December 17, 2013

The US Labor Department reported Tuesday that the Consumer Price Index (CPI), which is used to measure inflation, was flat in November compared to the previous month.

Reuters charts inflation in various goods compared to Core CPI since 2008. Education, healthcare, and food costs (which as mentioned is excluded from CPI due to its volatility) have all outpaced broader inflation, while housing has lagged.

In the last year, the index has risen 1.2%. Core CPI, which excludes food and energy, rose 0.2% in November, and 1.7% in the last year. Reuters quotes Laura Rosner, an economist at BNP Paribas: “This is not a game changer. The composition of price changes suggest we are going to see sub-2 percent inflation for some time to come”.

While a 10% increase in prices since 2008 may seem high, inflation is both the US and Europe is at historically low levels. The Federal Reserve has missed its 2% inflation target for the last four years, and Ben Bernanke is on track to ”finish his term with a record of historically low inflation”.

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