Inflation Last Decade Was Weakest Since Great Depression

January 15, 2020

U.S. consumer prices crept up in December, continuing the decade-long trend of muted inflation. The consumer price index was up 2.3 percent from a year earlier. This brings the total CPI increase for the decade to 19 percent, the lowest since the Great Depression.

Since inflation skyrocketed in the 1970’s, the Fed has sought to more closely control the issue through changes to interest rates. The Fed now faces the opposite problem, with inflation falling below their target. The Fed uses a different index from CPI to track inflation, but this gauge too has regularly fallen below their target.

There are concerns that muted inflation could be an indication of slowing economic demand. However, economists point to other possible causes for low inflation, such as companies having less pricing power in a globalized world and where consumers can easily search out the lowest price through online shopping.

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