Released October 29, 2009
RALEIGH, N.C. – Some analysts keep saying that one threat to the economy is higher inflation. This worry is prompted by all the spending and money creation the government has done in the past year to fight the recession. Are we seeing any signs yet of higher inflation?
Mike Walden, North Carolina Cooperative Extension economist in the College of Agriculture and Life Sciences at N.C. State University, responds:
"No, we're not, and that's the good news. In fact, if you look at total inflation, including everything that consumers buy, it was actually negative last year. It went down by 1.5 percent. That means on average, prices fell by 1.5 percent.
If you do take out what economists call volatile energy and food prices - we often take those out because they can move up, but they also can move down very quickly - then we do find that we did have positive inflation as prices went up. But they went up only a little over 1 percent, about 1.4 percent.
Regardless of the measure you look at, most economists don't see a threat of higher inflation right now. But experience tells us that higher inflation takes time to develop. The federal government has engaged in a lot of spending, a lot of money creation. That often will take between 18 and 24 months to show up as higher inflation. So I think the worries about higher inflation are not worries about higher inflation right now. They're worries about higher inflation in 2010 and 2011."
--30--
http://www.ncsu.edu/project/calscommblogs/news/archives/2009/10/economic_perspe_479.html
