Let’s see. Stocks are in the basement. Housing prices continue to sink like a stone. And more and more people are without a job. But here’s some great news for you: the stuff you buy is still getting more expensive.
Here’s how the WSJ puts it:
U.S. consumer prices increased for a second-straight month to start the year for everything from clothing and new cars to medical care, raising the odds that the U.S. will avoid a protracted deflationary spiral of falling prices and spending.
Ah yes. So thoroughly have we been brainwashed into thinking that lower prices are a bad thing that you can just say something like “a protracted deflationary spiral of falling prices and spending”, and everyone agrees that’s a terribly scary prospect.
As for the numbers:
Consumer prices were up just 0.2% compared to one year ago, which is significantly under the 2% annual rate of inflation that most Fed officials think is consistent with their dual mandate of price stability and maximum employment. Inflation was above 5% as recently as last August, before energy and commodity price drops kicked in and the economic downturn accelerated both here and abroad.
However, the less-volatile core CPI index was up 1.8% from one year ago and increased at a 1.5% annual rate over the last three months. Both are more in line with the Fed’s objectives.
Call us old fashioned, but we don’t buy into the idea that rising prices are a good thing. Could it be that since deflation is horrible for borrowers — and there’s no bigger borrower than the US government — there’s a conspiracy to keep us confused on the subject.
Nah, that’s just paranoid Ron Paul stuff.