That Other Inflation

WASHINGTON — No one expected December’s inflation numbers, announced Friday by the Labor Department, to be greeted with as much anticipation as last week’s unemployment report. But with so much government spending through stimulus efforts and economic rescue programs in 2009, inflation remains a lingering concern.

According to the Bureau of Labor Statistics, the unadjusted consumer price index increased 2.7% in 2009, compared with a 0.1% increase in 2008. That may seem like bad news, but the low figures for 2008 were largely due to a 21% drop in energy prices that year. Energy prices rose 18.2% in 2009.

Broadly, inflation only increased by 0.1% in December, following a 0.4% increase in November 2009. In fact, the December increase was the lowest since July. Last year, the overall cost of food dropped 0.5%–the largest decline since 1961, with the price of dairy goods falling by 7.6%, their biggest drop since the Great Depression.

Friday’s figures are a good sign that inflation is not an imminent threat for the Federal Reserve, but it’s also a sign that economic recovery isn’t steaming ahead.

Forbes