Inflation Watch for January, 2011

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  • 1. Inflation Watch
    Inflation (price change) is important for REALTORS® because changes in prices in the economy can lead to shifts in interest rate policy by the Federal Reserve Bank.
    During the current financial crisis, fears of deflation were present in news reports (deflation can lead downward spiral of prices that destroy an economy similar to what happened in the Great Depression)
    While talk of deflation is less, some are fearing that inflation in the coming years may lead to another unpleasant economic condition called stagflation (high unemployment and high inflation) that makes it difficult for the central bank to combat inflation due fear of further job market deterioration.
  • 2. Inflation Watch January 14th, 2011
    Core consumer and producer prices are moderate.
    Underlying inflationary pressures seen in commodity
    Oil prices are increasing
    Gold, other metals and commodities are moving up strongly.
    Dollar showing recent signs of strength. A weaker dollar makes imported goods more expensive and adds to inflationary pressure