Inflation in U.S. Remains Negative

inflation

U.S. inflation has remained negative after January, when the price of gas suffered a steep decline, according to official figures. The Consumer Price Index (CPI) fell by 0.7 percent in January, after falling 0.1 percent in December. According to the Department of Labor, this was the first annual drop in nearly five years.

Gas prices fell by 18.7 percent last month. If the price remained static, the CPI would have increased by 0.1 percent, thus creating positive inflation, according to experts.

U.S. Federal Reserve Chairwoman Janet Yellen explained she predicts U.S. inflation to begin to rise in the next few months. She said gas prices will stabilize as oil prices fall to a moderate rate – U.S. rates have been near zero since 2008.

Economy analysts state the short period of decreasing prices will not have any affect to the economy. The annual inflation rate dropped to -0.1 percent, which is deflation, they said.

Although prices have dropped, the U.S. economy is fairing well, with positive growth in the fourth quarter of 2014 of 2.6 percent and a decreasing unemployment rate.

By Alex Lemieux

Source:

BBC

Photo by Dirk Knight – Flickr License

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