Each month the federal government compares the prices of everyday products to prices one month before. All of these comparison make up the Consumer Price Index or (CPI) CPI is the big economics term for inflation.
You’ve probably heard of inflation but may not know what it is. Inflation causes a drop in the value of your money. As the value of your drops, it loses its buying power. It takes more of your money to purchase the goods and services that you use every day. When inflation rises, it tends to slow the economy down because your employer probably isn’t giving you a pay raise that matches the rate of inflation.
In October the Consumer Price Index rose 0.1 percent. Food prices rose 0.3 percent and the cost of shelter rose 0.3 percent while gas prices fell 0.6 percent. Over the past year, prices have increased 2.2 percent.
Is That Anything to Worry About?
At this point, no. Although the CPI rose 0.1 percent in October, it had risen 0.6 percent over the past two months. Although the monthly CPI numbers are important to economists, they’re far more interested in the trend over time. You can read more about CPI by clicking here.
There’s no doubt that the economy remains challenged but most economists agree that it is on a well documented path to recovery. That’s good for all consumers.
(Don’t you wish gas prices were still as low as the prices in the picture?)