Prices of consumer goods holds steady, indicating that inflation is at bay

Because of the recession people looks after the prices of their goods. According to the government the price of the consumers goods held steady in February. The labor department announced that there’s no movement in the prices. But with fuel and volatile food it rose with 0.1%

A few facts:
• Cars: - used vehicles rose with 0.7 %
           - new vehicles rose with 0.4 %
• Medical care costs: + 0.5 %
• Food prices: + 0.1 %
• Energy: reduced with 0.5 %

The US had to do something to keep the constancy in the prices. There a lot of efforts to stimulate the economy but they haven’t achieved a lot yet.
The federal reserve want a maximum increase of 2% and in comparison with last year there’s a grow of 1.3%. But it’s getting better because the inflation is stabled.

When there’s a weak demand for goods the prices will fall which will cause a deflation. But because there’s a recovery the demand will not drop.

The prices maintain the same because of the high unemployment rate. When people doesn’t have a job, they haven’t a lot of money to buy goods with, so the companies doesn’t earn a lot of money. So they have to raise the prices.

I think it’s difficult to lower the prices in times of recovery. Cause the economy isn’t strong enough to drop the prices. When they decrease the prices the companies will earn less and that’s not good for the economy. Like a lot of economists said it will take another 2-3 years until the economy will be strong again. It’s because the recovery that some interventions are stopped so they have to do it on their own again and that’s not always that easy. And due to the fact that a lot of people has lost their jobs it’s difficult to raise the prices because they can’t effort them a lot.

Written by Sofie Lamon (2fv4)
source:  http://www.nytimes.com/2010/03/19/business/economy/19econ.html