Inflation Rate Is Going Nowhere

by Robert Martin | October 30, 2013 11:57 am

inflation ratePlenty of investors have their eye on the inflation rate these days. With the Fed continuing its quantitative easing and showing no signs of tapering anytime soon, many are concerned the inflation rate could spike.

Two reports today, though, show the inflation rate is anything from out of control. Instead, inflation remains modest[1] — as it has been for several years.

The first proof of a low inflation rate was the fact that Social Security benefits[2] will only rise 1.5% next year. That’s one of the smallest increases ever, as benefits were upped by 3.6% in 2012 and 1.7% this year.

On top of that, the Bureau of Labor Statistics released its Consumer Price Index[3] this morning, and that data also confirmed a low inflation rate. Overall prices ticked up a mere 0.2% month-over-month in September, and rose only 1.2% year-over-year.

Last month’s inflation rate was in-line with analyst expectations. And for perspective on just how modest that inflation rate is, the 1.2% increase is the smallest since April.

Of course, falling gas prices played a huge role in keeping that headline inflation rate in-check. The energy index has fallen over 3% in the last year, while gas prices have dipped 7.5%.

Still, even excluding food and energy, the inflation rate wasn’t out of control. Prices rose 1.7% over the last 12 months.

The bottom line is that, while it’s smart to keep an eye on the inflation rate, don’t lose any sleep over it. Despite the Fed’s policy, the inflation rate is still tame.

The next inflation rate update published by the U.S. government is scheduled for release on Nov.20.

Robert Martin covers consumer and financial news for

  1. inflation remains modest:
  2. Social Security benefits:
  3. Consumer Price Index:

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