With the high demand for products and services throughout the world this past year, it was no surprise that inflation has been on the rise. But in recent months, the data shows that inflationary pressures have been gradually easing, bringing some holiday cheer to households across the globe.
Inflation is a macroeconomic concept that measures the rate of increase in the general price of goods and services, and it is usually indicated by the Consumer Price Index (CPI). Although it is normal for inflation to rise and fall due to shifts in the global economic environment, any large or sustained increase can cause financial problems for households trying to make ends meet.
This year, however, trend data from countries around the world suggests that inflation has been decreasing for the past few months. According to the US Bureau of Labour Statistics, the overall US CPI only increased by 0.2% in November, the fourth consecutive month of slowing inflation. The situation in the UK is similar; the latest inflation data from the Office of National Statistics shows that prices have risen by just 0.7% in the last three months, the lowest rate since September 2020.
The drop in inflationary pressures comes as welcome news, particularly for those who have been struggling financially due to the industrial and economic disruptions resulting from the pandemic. It gives individuals and businesses the opportunity to plan more confidently for the year ahead. Furthermore, lower inflation means that businesses can better predict their costs and make plans accordingly, giving them more time and money to reinvest in research and development.
Furthermore, lower inflation leaves central banks like the Federal Reserve with more flexibility to keep interest rates low for longer. This provides businesses and households with greater access to capital at lower costs, leading to increased economic and job market activity.
As the world enters into 2021, we must keep an eye on the inflationary trend and continue to anticipate what it could mean for businesses and households globally. Despite the pandemic having caused much chaos and disruption across the world, lower inflation is a much-needed break for us all and could allow for greater economic stability in the coming new year.
With the high demand for products and services throughout the world this past year, it was no surprise that inflation has been on the rise. But in recent months, the data shows that inflationary pressures have been gradually easing, bringing some holiday cheer to households across the globe.
Inflation is a macroeconomic concept that measures the rate of increase in the general price of goods and services, and it is usually indicated by the Consumer Price Index (CPI). Although it is normal for inflation to rise and fall due to shifts in the global economic environment, any large or sustained increase can cause financial problems for households trying to make ends meet.
This year, however, trend data from countries around the world suggests that inflation has been decreasing for the past few months. According to the US Bureau of Labour Statistics, the overall US CPI only increased by 0.2% in November, the fourth consecutive month of slowing inflation. The situation in the UK is similar; the latest inflation data from the Office of National Statistics shows that prices have risen by just 0.7% in the last three months, the lowest rate since September 2020.
The drop in inflationary pressures comes as welcome news, particularly for those who have been struggling financially due to the industrial and economic disruptions resulting from the pandemic. It gives individuals and businesses the opportunity to plan more confidently for the year ahead. Furthermore, lower inflation means that businesses can better predict their costs and make plans accordingly, giving them more time and money to reinvest in research and development.
Furthermore, lower inflation leaves central banks like the Federal Reserve with more flexibility to keep interest rates low for longer. This provides businesses and households with greater access to capital at lower costs, leading to increased economic and job market activity.
As the world enters into 2021, we must keep an eye on the inflationary trend and continue to anticipate what it could mean for businesses and households globally. Despite the pandemic having caused much chaos and disruption across the world, lower inflation is a much-needed break for us all and could allow for greater economic stability in the coming new year.
