I’ve been keeping an eye on the US inflation rate, considering all my investments, its an important indicator in the economy and easy to monitor forecasts online. I know that moderate inflation is actually good for economic growth, since when we expect prices to rise, we’re more likely to buy right away, rather than wait and thus demand rises. So, a healthy inflation rate is 2%, once the bad effects of gas, food and oil prices are stripped out, also know as the core inflation rate.
As I mention, I monitor inflation rates from month to month and that helps me to know where the economy is in the business cycle. I saw that prices didn’t increase in December, and that was thanks to lower prices for gas, used cars and trucks, apparel and health care equipment. I read that lower prices in these areas offset higher prices in natural gas, transportation and health care services. Year-over-year, prices were up only 1.7%. The culprits were health care services, food, apparel and new vehicles. The good news is that prices were lower in energy services, such as electricity and natural gas, and used vehicles.