The law of supply and demand is very imminent the way the different factors of the economy interact with each other these days. The US market is becoming a hot melting pot of conflicting factors as it continues to struggle to completely rise from the quagmire of inflation.
According to the Department of Labor the consumer price index increased by about 0.1 percent as of October. This is primarily because of the decrease in gas prices by as much as 0.6 percent. It must be remembered that the sharp gain of 0.6 percent that was experienced in the last two months was driven by the spike in gas prices.
Aside from the unstable economic factors like gas and food, the prices of all other commodities went up by as much as 0.2 percent as of last month. For instance, the cost of shelter went up by 0.3 percent because the demand for housing also went up. It was noted that the number of vacant apartments and rooms across the US have declined; hence, the higher rent. This goes the same with the rate hotels offer per night. The recent increase in the cost of shelter is the said to be the highest in 4 years’ time.
The prices of airline tickets and clothes also increased. Even the number of bad credit loans paid in full has gone up. Economists say that the increase of these commodities reflects the bettering consumer spending. As a matter of fact, the year-end comparison of overall consumer prices of 2.2 percent shows that it has even exceeded the expectations set by the Federal Reserve. The Federal Reserve only has 2 percent on its mark.
An expert economist explains the recent upturn of the American economy as a direct result of mild inflation. Mild inflation is when people have more to spend and can therefore help in pushing the overall economy to grow. The Federal Reserve usually comes in if the inflation rate is too low. However, if they see that the prices of commodities are rising too fast then they would be forced to increase the interest rates too.