Economic Indicators 

The inflation mystery

Chris Dillow

Chris Dillow
The inflation mystery

US figures next week will highlight a curiosity – that inflation is flat. The Bureau of Labor Statistics (BLS) is expected to say on Friday that 'core' CPI inflation (which excludes food and energy) is just 1.7 per cent, lower than last year. This is curious because economists used to believe that falling unemployment – and especially an unemployment rate below around 6 per cent – would lead to higher inflation. And yet inflation is absent despite an unemployment rate of just 4.4 per cent – close to a 16-year low.

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