The inflation rate is important because it lets consumers know whether their purchasing power is increasing or decreasing. It also influences actions of the Fed, which tends to tighten the monetary policy and slow down the economy when there is a serious risk of inflation. If the Fed acts too soon, it can counteract economic recovery and increase the level of unemployment.
Inflation is measured by the Consumer Price Index, or CPI, an index of the cost of all services and goods to an average consumer. Though the prices of some commodities are increasing, commodities are not the only things taken into account when calculating the inflation rate. Our economy is service-based and the cost to provide many services is not extremely sensitive to commodity price changes.
People can find the inflation rate by going to the U.S. Bureau of Labor Statistics website and they can even use an inflation calculator to determine inflation between two specific dates. Inflation rates are updated monthly and the annual inflation rate for January 2011, the most recent available, was 1.63 percent. Individuals can also find inflation rates for other countries by conducting an online search.
About one-third of the CPI is represented by housing costs. Housing prices are continuing to fall and it will be a long time before they rise at a rate high enough to move the CPI. Wages are also not rising and the recent union-busting activities will not permit widespread inflation of wages.
However, because of the expansion of spending by the US federal government, inflation is simply inevitable, as we’ll discuss in future articles here at LiveSilverPrices.net.
How to Beat Inflation
Silver prices have been exploding for the last few years. We'll show you exactly what the live silver prices are, what to expect from the silver market, and how to invest in silver.
We're now offering our newsletter for free to the public. Sign up below to learn what the "real" inflation rate is, how I'm personally investing in silver.
