The summer of 2020 has seen a slowdown in the rate of inflation, the increase of the general level of prices for goods and services in an economy. In the United States, the consumer price index (CPI) level for September was 3.7 percent, compared to 4.2 percent in June. This indicates a continuation of the gradual consumer price slowdown as the world slowly recovers from the effects of the COVID-19 pandemic.
The decrease in the inflation rate coincides with decreased consumer spending during the pandemic. As unemployment numbers soar and income levels are reduced, fewer people are able to afford goods and services, which leads to a decrease in prices. This trend is most clearly seen in the decrease in gasoline prices, which are down by 10.2 percent from a year ago.
The Federal Reserve Board of Governors (FRBOG) attributes the decreased inflation rate to the reduced demand for goods and services and the stability of the housing and rental markets. The decrease in oil prices and a weak foreign exchange rate are also contributing to this trend. Additionally, the tight monetary and fiscal policies put in place by the US government have limited the rate of inflation.
It is expected that the consumer price index level will remain relatively stable throughout the remainder of 2020, barring any unforeseen changes due to governmental policies or external factors. This is largely positive news for those with reduced incomes during the pandemic. Not only is consumer spending reduced, but prices remain relatively low, making it easier for consumers to make ends meet.
Overall, this slowdown in inflation is good news for the US economy, as consumer spending and prices remain relatively low. The FRBOG urges the citizens of the US to continue to practice fiscal responsibility and to save money whenever possible. The sustained decrease in inflation will benefit all US consumers, enabling them to enjoy the lowest prices we have seen in years.