US Inflation Rises in March but Inflation Expectations Remain Moderate
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US Inflation Rises in March but Inflation Expectations Remain Moderate

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The CPI increased at an annual rate of 2.4 percent in March 2014 but the expected rate of inflation over 5 and 10 year time horizons remains well below the Fed's target of 2 percent

The CPI increased at an annual rate of 2.4 percent in March 2014 but the expected rate of inflation over 5 and 10 year time horizons remains well below the Fed's target of 2 percent

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    US Inflation Rises in March but Inflation Expectations Remain Moderate US Inflation Rises in March but Inflation Expectations Remain Moderate Presentation Transcript

    • Data for your Classroom from Ed Dolan’s Econ Blog Consumer Price Inflation Rises in March, but No Sign of an Increase in Inflation Expectations March 19, 2014 Terms of Use: These slides are provided under Creative Commons License Attribution—Share Alike 3.0 . You are free to use these slides as a resource for your economics classes together with whatever textbook you are using. If you like the slides, you may also want to take a look at my textbook, Introduction to Economics, from BVT Publishing.
    • Consumer Price Inflation Edges Up in March  The U.S. consumer price index rose at a seasonally adjusted rate of 2.43 percent in March 2014, up slightly from the previous month.  Prices for food and cars helped push the average higher.  In this figure, a fourth-power polynomial trendline is used to smooth month-to-month variation March 19, 2014 Ed Dolan’s Econ Blog
    • Core Inflation Rate Also Rises  Another way to smooth month-to- month variation is to remove volatile food and energy prices from the all- items CPI  The result is called the core CPI  In March, an increase in food prices was almost entirely offset by a decrease in energy prices, so that core and all-items inflation was approximately the same March 19, 2014 Ed Dolan’s Econ Blog
    • Little Change in Expected Inflation  The Cleveland Fed publishes an index of expected inflation based on the prices of Treasury Inflation Protected Securities (TIPS)  In the summer of 2013, inflation expectations moved higher after the Fed announced that it would taper its program of massive asset purchases  Since September 2013, inflation expectations have remained approximately steady, with some month-to-month variation March 19, 2014 Ed Dolan’s Econ Blog
    • The Bottom Line  The Federal Reserve has set a target of 2 percent inflation, as measured by the Personal Consumption Deflator, equivalent to about 2.5 percent inflation for the CPI  The latest data on current and expected inflation show that the economy is still falling short of the Fed’s inflation target March 19, 2014 Ed Dolan’s Econ Blog
    • Click here to learn more about Ed Dolan’s Econ texts or visit www.bvtpublishing.com For more slideshows, follow Ed Dolan’s Econ Blog Follow @DolanEcon on Twitter