US inflation fell for the first time in two years with a rate of 5.4 percent in August from a year ago. That compares to July’s 5.6 percent according to Bureau of Labor Statistics data released Tuesday. A decrease in inflation makes inflationary-hedge investments in commodities like gold and oil less attractive, but turmoil in the financial sector has its pull too. Gold and oil showed declines in morning trading.
Reports are abound that the latest figures could pave the way for the US Federal Reserve to cut interest rates in their meeting Tuesday, or at least adjust their language indicating a potential future cut and signaling declining inflationary threats. Precious metal investors are sure to await their afternoon statement.
The 1913-2008 Inflation Calculator and rate charts with their udpated figures show inflation’s drop using the government’s latest Consumer Price Index (CPI) data. By entering any two dates from 1913-2008 and then a dollar amount, the CoinNews Inflation Calculator measures the change in the buying power of the dollar over time. At the same time, it charts plot historical annual averages for rate of inflation, and rates of inflation, or inflation rates.
Inflation rates drop in August, the numbers…
On a monthly basis, consumer prices decreased 0.1 percent in August, which was inline with the level many economists had expected. The decline compares to an increase of 0.8 percent in July followed by a 1.1 percent rise in June.
“Inflation is about to slow in a very significant way because we have weak global growth,” said Mark Vitner, senior economist at Wachovia. And we have seen “dramatic declines in commodity prices that are unlikely to be reversed,” he added.
The core Consumer Price Index (CPI), which excludes volatile food and energy costs, increased by 0.2 percent, which was inline with market expectations. The figure compares to a 0.3 percent rise in July.
What’s the real world meaning of these figures? The CoinNews Inflation Calculator can provide some historical insights.
Inflation Calculator examples
Using the calculator, anyone can determine the purchasing power of the dollar over time. A few examples after adjusting for inflation:
- An item purchased in 1913 for $1 would now cost $22.13 (down 9 cents from July figures)
- An item purchased in 1950 for $10 would now cost $90.91 (down 36 cents from July figures)
- An item purchased for $20 in 1985 would now cost $40.72 (down 17 cents from July figures)
Mixed dates may also be used with the Inflation Calculator. As examples:
- An item purchased today for $200 would have cost $49.11 in 1975
- An item purchased for $100 in 1980 would have cost $158.62 in 1990
Of course, not all "goods and services" rise or fall in tandem with inflation rates. For example, many computers when adjusted for inflation are actually less expensive today (and do more) compared to years ago .
Latest Charts on Inflation Rates
The CoinNews inflation page also includes two updated charts indicating the:
- Annual Averages for Rate of Inflation
- Annual Percent Changes for Rate of Inflation or Inflation Rates
While the Inflation Calculator is more of a general financial interest tool, specific numismatic calculators and tools may be found via the CoinNews menu: "COIN PRICING & COLLECTOR TOOLS".