Historically low price inflation

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The threat of price inflation remains historically low compared with other periods over the more than 70 years that U.S consumer prices have been tracked.

This is true based on the Consumer Price Index (CPI) as well as the Personal Consumption Expenditure (PCE) measure of consumer price inflation, which is the preferred measure of Federal Reserve Board.

Inflation tends to be slightly lower by the PCE measure because it accounts for substitution effects as prices change. In contrast, the CPI’s “fixed basket” does not account for substitution.


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