Consumer Prices Rise

Posted by Lily Chung

Even though the recession was supposed to have reduced any chances for inflation for the rest of the year, we are currently seeing a 0.4 percent rise in consumer prices. This was mostly due to the jump in gas prices (again!) as well as an increase in clothing prices. It was a big relief when gas prices lowered a drastic amount towards the end of 2008, but starting in 2009, there has been an increase of 6 percent in January and 8.3 percent in February. Energy costs rose 3.3 percent, cost of clothes rose 1.3 percent, and new car prices increased 0.8 percent. Although we may all love decreasing prices, the slight inflation has given analysts hope that the economy will not spiral into dangerous territories of deflation, which has not been seen since the Great Depression. Deflation has been feared for quite a while with the "deepening recession and prolonged housing slump".

Sources:
US Consumer Prices Rise 0.4% in February
Rise in Consumer Prices Eases Deflation Fears
Consumer Price Index Summary