Inflation The Rules Have Changed

摘要

The U.S. Economy continues to thrive, and inflation is not raging out of control. Producer prices are rising at an annual rate of less than two percent; consumer prices less than three percent. Federal Reserve actions have been credited widely with keeping inflation in check. However, forces much more powerful than Fed interest rate manipulation have come into play in recent years and deserve the real credit for keeping the lid on price increases. Sharp price jumps have accompanied prior economic recoveries. Suppliers historically used recovery-driven inflation as cover for "passing through" cost increases (plus a little additional) to customers in the form of higher prices. These excessive raises widened profit margins for the suppliers while, of course, further exacerbating inflation.