Current U.S. Inflation Rate Statistics and News

Explanation and the Monthly Inflation Rate Statistics Since January 2007

The current inflation rate was 0.3% in Nov. 2019 according to the Consumer Price Index Summary. That's bordering deflation. Falling gas prices were offset by increases in other categories.

Gasoline prices rose 1.1% even though there was a decrease in oil prices. They contribute 70% of gas prices. The Energy Information Administration's oil price forecast fell to $60 a barrel for 2019 and 2020. 

The prices of used cars and trucks rose 0.6%, while new vehicle prices fell 0.1%. Transportation services rose 0.8%.

In the last 12 months, the cost of health care services rose by 5.1%. Drug prices also rose 0.6% during that time. Health care costs have risen more slowly since Obamacare took effect in 2014. Before that, prices rose 7% to 8% a year

Current Core Inflation Rate

Gas prices are mostly affected by oil prices.

The core inflation rate was 1.6% year over year. The core rate eliminates the impact of volatile oil and food prices. Their prices change daily because they're based upon commodities trading. Oil prices also tend to rise in the spring in anticipation of higher demand from summer vacationers. High oil prices will increase the prices of fertilizer and transportation costs. That will create high food prices

The core rate was below the Federal Reserve's 2% inflation target. The Federal Open Market Committee has maintained the fed funds rate at a range between 1.5% and 1.75% in it's December meeting. The Fed last lowered the rate to a range between 1.5% and 1.75% at its October 30, 2019, FOMC meeting. The Fed is trying to offset the negative impact of President Donald Trump's trade war

In January 2012, the Fed switched to the Personal Consumption Expenditures to measure inflation. The Fed considers it to be more reflective of true underlying inflation trends. Its core inflation rate was 1.6% year over year as of Dec. 2019, well below the Fed's target. That's from the most recent release from the Personal Income and Outlays report. 

How the Current Inflation Rate Affects You

You can't escape inflation. Photo: Katrina Wittkamp/Getty Images

The inflation rate is an important economic indicator. It tells you how fast prices are changing in the current phase of the business cycle

It's measured by the Consumer Price Index which is reported by the Bureau of Labor Statistics each month.

Moderate inflation is actually good for economic growth. When consumers expect prices to rise, they are more likely to buy now, rather than wait. This increases demand.  As pointed out by former Fed Chair Ben Bernanke inflation is usually driven by expectations of inflation. This means that, if people and investors think prices will go up, they will buy things now, increasing demand and actually driving the prices further up. In other words, inflation is a self-fulfilling prophecy. 

The Federal Open Market Committee reviews the core inflation rate when it decides at its eight FOMC meetings whether to raise the fed funds rate. The Federal Reserve set a target rate of 2% for the core rate. When the rate is lower than the target, the Fed may use expansionary monetary policy. It will lower the fed funds rate to boost economic growth. That's done to prevent any possible recession.  

When the rate is higher than the 2% target, the Fed uses contractionary monetary policy. It raises rates to keep prices from rising faster than your paycheck. Some critics worry that higher interest rates would weaken consumer demand. That would slow economic growth, reducing its ability to create jobs.

Some people worry that inflation will skyrocket, causing hyperinflation. They are concerned that price increases could be like that seen during the Weimar Republic in Germany. When that happens, gold bugs can cause a rally in the precious metal as a hedge. But to have hyperinflation, prices must rise 50% a month. 

BLS Inflation Calculator

The BLS inflation calculator quickly shows how inflation eats away at your purchasing power. For example, a 2.5% inflation rate means that something that cost $100 last year now costs $102.50. It also means you need a 2.5% raise just to stay even. Not to make you feel bad, but if you were celebrating your hard-earned 3.5% raise, thanks to inflation it is really only worth 1.0% in additional buying power.