This post by Jill Schlesinger originally appeared on CBS' MoneyWatch.com.
I know that your eyes glaze over when people like me talk about economic data like the Producer Price Index, which actually dropped this morning and the Consumer Price Index (due out tomorrow morning), but check out this segment with CBS3, where I explain why you should care about inflation:
Here's your cheat sheet on inflation:
- Consumers want prices to stay low, so that our dollars can go further. When inflation is on the rise, it means that every dollar you spend gets you less.
- The Fed needs to make sure that inflation stays low in order to keep interest rates low. As soon as prices start to percolate, the Fed will be forced to raise rates, which will make the cost of borrowing rise.
- Analysts thought the Fed would act in the 3rd quarter would but now many say that the 4th quarter is more likely and maybe even next year. That's good news if you owe money on a variable loan, but not so good if your money is in a savings account!
Check out these investment tips that might come in handy if/when inflation returns!
Jill Schlesinger is the Editor-at-Large for CBS MoneyWatch.com. Prior to the launch of MoneyWatch, she was the Chief Investment Officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.