What is the inflation rate from 20172018 How did it effect t

Solution

The inflation rate (increase in the general price level) for the economy during the four quarters of 2017 ranged from 2.7% to 1.6%, averaging around 2% for the financial year. The rate is under the target rate followed by the Federal Reserve and this is the reason why the Federal Reserve opted for increasing the rate of interest to adopt a tight monetary policy.

The low inflation rates were able to stimulate the consumer spending which increased for most part of the year. The increase in the energy prices mainly of crude oil, increased the cost of transportation (3.8%), electricity prices rose faster than previous year at 2.7%, however, medical care services rose at a steady rate of 1.6%. Retails sales were higher this festive season relatively,

Overall the economy experienced a rise in consumption spending, reflecting a fairly solid economic environment. Concerns were there about the rising cost of living which was the only bad effect, but the overall increase in GDP to be expected next year, will pacify consumers.