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Friday, October 15, 2021

US Inflation analysis – An Overview

The term ended in July 2020, the rate of inflation in the United States recorded for a year was 1.0%. On, August 12th, 2020, the U.S Labor Department said the earlier figure was 0.6%

The next time the update for the inflation rate in the United States will be released is on September 11th, 2020. This will state the current inflation rate for the period that ended in August 2020. 

What is the Annual Current Inflation rate?

US InflationBy using 12-month CPI or Consumer Price Index selections, inflation is calculated and the statistical data obtained is made available for everyone by the Labor Department’s Bureau of Labor Statistics (BLS). 

The inflation calculator helps in assessing the percentage of inflation. 

Forecast US Inflation- 2020, 2021

Federal Open Market Committee or FOMC predicted that the inflation rate (PCE) in the United States in 2020 will average 1.9% and show an increase of 2.0% in the year 2021. However, this figure will manifest stabilization through 2022. 

What is PCE inflation?

This can be explained as the change in percent in “personal consumption expenditures price index”. This is used as a primary measure of inflation by the Federal Reserve so that the “inflation goal” can be achieved. 

There are other agencies that offer forecasts about current inflation rates and these include-

  • International Monetary Fund (IMF)
  • United Nations Department of Economic and Social Affairs (UNDESA)
  • Organization for Economic Co-operation and Development (OECD)
  • European Commission 
  • U.S Department of Agriculture (USDA)

The forecasts that they give are on the basis of CPI or Consumer Price Index.

What do these agencies have to say about US Inflation?

CPIAccording to them, the US CPI rate of inflation will be between 2.1 and 2.3 in 2020 and the average will be around 2.2% in the year 2021. 

Consistently, all the agencies have pointed out that the rate of inflation in 2020 will hover around 1.8 which was in 2019, and will increase in 2020 from thereon. Over a longer-term period, let us say as long as 2024, the CPI will be at 2.3 percent. 

What does the inflation rate depend on?

The rate of inflation depends on the balance that exists between demand and supply within the economy as an aggregate. Conditions in the labor market play an instrumental role in determining the inflation rate. Unemployment means that there is a decrease in the workforce. In terms of a layman, there is a price rise for most of the commodities when there is inflation. 

Unemployment rate

The U.S Bureau of Labor Statistics (BLS), revealed the rate of unemployment in 2019 was recorded at 3.5%. This was also the lowest since 1969. 

The BEA or U.S Bureau of Economic Analysis stated US GDP, which represents the country’s aggregate demand showed an increase of 2.1 percent in Q4 of 2019, which remained the same since Q3. 

The current US CPI rate of inflation increased by 0.2%, thereby showing an average 2.3 percent in December. 

As the world is trying to wriggle out of the clutches of the pandemic, economies around the world are dwindling and in deep crises and uncertainty. What remains to see is when the economies around the globe will return to its normal course again. Hopefully, the value of money will improve. Even in this dreadful situation of pandemic one can plan to invest in  stocks as well. 

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Kiara Dawson
Kiara Dawson comes from an Engineering background, with a specialization in Information Technology. She has a keen interest and expertise in Web Development, Data Analytics, and Research. She trusts in the process of growth through knowledge and hard work.

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