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Why Raising Prices Is So Hard: Low Inflation


US Inflation Rate Chart

US Inflation Rate data by YCharts

The U.S. inflation rate was a very soft 1.74 percent for December 2012 compared to 2.96 percent the year before.Related to this, Bloomberg reports that the cost of living capped the third-smallest gain in the past decade. Inflation is not the problem of our economy. It's one of the reasons that store owners —restaurants, convenience stores, quick print, delivery, retailers, services, auto services, hospitality, to name a few —- no doubt find it difficult to raise prices.

Price increases will probably remain restrained as retailers like Target Corp. use discounts to attract customers and budget battles in Washington hurt confidence. Federal Reserve policymakers are likely to maintain unprecedented easing measures while inflation holds below their target level and absent further progress on reducing joblessness. "There’s nothing to worry about on the inflation front” so the Fed will continue easing measures, said Bricklin Dwyer, an economist at BNP Paribas in New York, who correctly projected the December price readings. “We’re seeing weaker domestic demand playing into weaker price pressures.” - Bloomberg, Jan 16, 2013

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