Is U.S. Inflation in October a Sign of Economic Weakness?
Inflation in the United States is showing its lowest levels in several years in the month of October, USA Today reports. The Consumer Price Index, a bundle of goods and services where prices are assessed in order to determine inflation rates, reported a drop of 0.1 percent in the month of October. In addition, for the 12-month period including October 2013, overall inflation rates were a mere 1 percent.
Though the month-to-month drop has been comparable with rates in the past several months, the yearly rate has been inching lower as higher inflationary periods from a year ago are phased out of the data. Core inflation, which excludes food and gas prices, showed only a small increase of 0.1 percent in the month of October, with the yearly rate holding at 1.7 percent.
For core inflation, the yearly value is closer to the Federal Reserve’s target rate of 2 percent. The overall rate falls woefully short of the ideal value. However, since the Federal Reserve computes inflation using a slightly different metric, it is possible that October’s data will have to be slightly altered before the Fed weighs in on the numbers. Historically, though, the Fed’s has posted inflation rates that were lower, not higher, than the CPI numbers would indicate.