There has been hardly any change in the customer price index in a long time. This comes from data which were released recently. . It does not require a little instant money to purchase the normal food. Federal interest rates are at about zero. This is on the part and parcel to the price index. Deflation is generally seen when an interest rate is at a steady low rate for too long.
Customer rates low for everybody
The Department of Commerce makes sure to know how much goods and services are costing, and also the rise and fall of that price. This is called the Consumer Price Index. The newest York Times reports that a .3 percent rise happened for the CPI in both July and August. The rise was attributed to prices of food and energy increasing. Consumer prices have not changed at all except for those two goods. The costs of goods and services hasn’t changed because of the connection between cost and demand. With so much unemployment, there is hardly any demand at all. It definitely means less payday money for retailers.
Extremely low rates of interest
Along with consumer prices staying low, federal rates of interest are at near zero for months. Banks are required to abide by the interest rate the Federal Reserve set. Banks have to use the rate when lending to other banks or borrowing. Usually these loans are used for loan credit. More are borrowing with such low interest rates. There is one thing to consider. Many banks don’t want to lend. That means the economic activity is no longer happening. When that happens, cash starts to lose value, as hardly any of the cash supply is being used. Deflation is what this is considered.
Bad to have low federal rates
Suppliers could have to raise the rates if deflation starts to happen to stay in business. Wages won’t go up with this, unfortunately.
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NY Times
nytimes.com/2010/09/18/business/economy/18econ.html?src=busln
