U.S Inflation

U.S inflation is a condition, when the price of goods as well as services in the United States, assumes an upward trend and remains there, for some time. Due to inflation, the economy of United States is affected greatly. Several changes have to be made in order to compensate for the increase in the price of goods as well as services.

U.S Inflation at a glance:

The Consumer Price Index of September 2007, shows the following trend in U.S Inflation-

• There was an increase in consumer price index for urban consumers (CPI-U), by 0.3% in the month of September prior to seasonal adjustment. This information was furnished by the Bureau of Labor Statistics, Department of Labor, USA.
• U.S inflation level was higher by 2.8% than it was, in the year 2006.
• There was an increase in CPI-W or Consumer price index, which is calculated for the urban wage earners as well as the consumer price index calculated for clerical workers, by 0.3%. This was again before the seasonal adjustment was made.
• The C-CPI-U or Chained Consumer Price Index, calculated for the urban consumers registered a 0.3% increase in the same month(September). This was not seasonally adjusted.
• The food index escalated by 0.5% in the month of September.

Inflation ultimately means that the purchasing power of dollar diminishes. Some economists feel that inflation is a way of shelling out an invisible or latent tax. The federal government in the United States makes all efforts to keep U.S inflation ranging between 2 percent to 3 percent. This is done to prevent hoarding of the US currency, dollar. Even though inflation is on the rise, implementation of several monetary policies, facilitated growth of the U.S economy.

It is known that as a result of inflation, prices increase. If proper measures are not taken by the people, it will only lead to the depletion of their savings. This is because, there will be a tendency to compensate for the rise in cost of goods and services. It does not mean that people would stop investing. They definitely do so, by taking certain precautions. People usually invest in inflation adjusted securities. The inflation adjusted securities also known as inflation protected securities, protect an individual’s money from losing its value over a period of time.

For this, the Federal government, in the United States, issues many securities. The securities are in the form of notes, bills, bonds and various other investment tools. As United States of America, is also a trading partner for so many countries, U.S inflation, will also affect trade with all its trading partners.

Consumer price index and U.S inflation- statistics:

• The statistics given below, furnishes details about data obtained for the year 2007.
• The consumer price index for the month of May was 2.700.
• The CPI was 2.700 in June.
• CPI was 2.400 in the month of July.
• The consumer price index for the month of August was 2.00.
• For September, the consumer price index was 2.800.