For the month of September, consumers in America experienced a decline in their buying power. The primary cause of this negative impact on the consumer’s wallet was due to the rapid increase in gasoline prices. Gasoline for the month of September rose in price by 7%. This rise in price follows an increase in gasoline prices for the month of August by 9%.
This significant increase in gasoline prices caused consumers to cut back in other areas of the household budget.
Specifically, the Consumer Price Index elevated to a level of .6% during the month of September. This wasn’t a surprise as most analysts had expected the Consumer Price Index to increase. This forecast was based on historical data realized for the month of August. These facts and percentage figures were released in a report generated by the Labor Department.
Taking fuel prices out of the equation, the Consumer Price Index, which does not take into account energy and food prices, increased just by .1%. This very modest increase is the third consecutive month of such minimal increases. This data can be construed to mean that inflation is currently under control.
For the year, September 2011 to September 2012, consumers experienced an increase in the CPI at a level of 2%.
Despite the significant rise in the Consumer Price Index, most analysts do not see inflation being a threat to the economy in the near or distant future.
Some of the concerns about the Fed’s action, regarding the infusion of cash into the economy, were that this financial action would cause the economy to experience inflation. However, there are many economists who think that the Federal Reserve would accept this collateral damage in the short term so that the United States could continue forward out of the current recession. In fact, the Fed affirmed in September that it would maintain the low interest rates for whatever period of time it would take so that the economy would continue along the path of becoming more robust.
Joseph Trevisani, a strategist with Worldwide Markets, affirmed that core inflation is minimal and therefore does not threaten the progress that is being made to revive the economy. He also added that the main concern of the Federal Reserve is not necessarily the financial climate, but that the actions taken were to stimulate employment.
Added to the mix is the fact that the Federal Government uses a far different measure to gauge inflation. This measure is calculated by the Commerce Department and trends lower than the Consumer Price Index. The measurement that the federal government uses is called the Personal Consumption Expenditures Index. For the year, in comparison, the Personal Consumption Expenditures Index rose by 1.5%.
