It can lead consumers to postpone purchases and makes inflation-adjusted interest rates higher, potentially discouraging borrowing. While most Americans prefer lower prices, economists warn that super-low inflation may slow economic growth. Both figures are below the Federal Reserve's 2 percent target. Inflation has been held back by sluggish growth and a tough job market, which makes it harder for retailers and other businesses to raise prices.Ĭonsumer prices rose just 1.5 percent in 2013, down from 1.8 percent in 2012. New and used car and truck prices also dropped, and airline fares declined 2.2 percent. Yet other items fell or barely rose: Food prices increased just 0.1 percent, and the cost of men's clothing fell by the most in nearly five years. The small increase occurred even though cold weather pushed up the cost of natural gas, electricity and other home energy sources by the most in more than five years.
confirms the fact that inflationary pressures remain well contained," Martin Schwerdtfeger, an economist at TD Bank, said in a note to clients. The year-over-year increase in core prices was the smallest in seven months.
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