Access the current inflation rate as measured by the CPI at

Access the current inflation rate (as measured by the CPI) at the Bureau of Labor Statistics website:

http://www.bls.gov/

Based on this inflation rate, explain three different ways that this rate will impact different parties in the U.S. economy. Be specific in your answer.

Solution

Latest inflation rate measured in CPI is -0.1% for the month of December,2015.

First Party : Consumer : It is positive for the consumer as they will get things at lower prices that means they will be able to save more and invest more keeping other things such as income constant.

Second Party : Cental bank Federal Reserve : Lower inflation shows low demand growth in the economy that puts pressure on the countrys central bank to use its policy tools to increase demand in the economy that can be through keeping interest rates lower for prolonged time.

Third party: Commodity producers: Lower CPI indicates that there is lower demand that means commodity producers are seeing rise in their storage and getting lower prices and profits that is negative for them.