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Economist Mike Walden: Why Has Inflation Been Tame?

This is Mary Walden with economist MW, welcoming you to the economic perspective.  Today’s program asks, why has inflation been tame?  Mike, in the U.S. as well as around the world, inflation has been relatively low for the past two decades. Although there are a variety of inflation measures, most have hovered in the range of 1% to 3%, and in a couple of years we actually had negative inflation.  Can we pinpoint the reasons?

  1. Four key reasons
  2. Technological progress – allowing businesses and households to accomplish tasks more efficiently
  3. Aging society – research shows inflation is lower when society ages – save rather than spend
  4. Globalization – introducing lower cost production and more competition
  5. Central banks, like the Fed – targeting inflation

And I’m Mary Walden for the Economic Perspective, an NC State Extension program from the Department of Agricultural and Resource Economics.