Question

In its statement dated June $14,2017$ , the Federal Open Market Committee indicated that inflation "is running somewhat below $2\%$ . Go to http://research stlouisfed .org/fred2/, and click on the Series ID link "CPIAUCSL" (Consumer Price Index for All Urban Consumers: All Items-SA). Then click on the link "Percent Change from Year Ago." What has happened to the inflation rate since the time of the last reported value in Figure $16$ ?

Short answer

Since December $2009$, the inflation rate has been fluctuating.

Step-by-step solution

Step 1. Concept of Inflation 

Inflation is defined as the rate at which the general price level of goods and services rises, resulting in a decline in the economy's purchasing power.

Step 2. Explanation

In December $2009$, the rate of change in the inflation rate was $2.8$ percent. The rate of inflation has risen over time, with the most recent adjustment in April $2018$ being $2.4$ percent.

Increased earnings, consumer confidence, and a low unemployment rate are all possible causes of inflation. Consumers spend more when their salaries are consistent and the unemployment rate is low. As a result of the increased spending, the price of products and services rises, causing inflation in the economy. Another cause of inflation could be a decline in supply, because when demand for a commodity rises, the supply of that commodity falls. As a result of the limited availability, consumers are ready to pay more, resulting in higher inflation.