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Inflation reaches 3.16% in April
According to the latest inflation data published today by the Bureau of Labor Statistics, the rise in consumer prices accelerated rapidly for the third month in a row from 2.68% in March to 3.16% in April, as shown in the graph below.
Some commentators are encouraged by these numbers. Reuters reports: "The pace of food and fuel price rises slowed considerably from March, suggesting inflation pressures may be peaking."
This can be seen by comparing the rise in the inflation rate from February to March of 0.57% with the rise in the inflation rate from March to April of 0.48%, as shown by the line getting less steep from March to April in the graph. If this decelleration would continue, then inflation would peak at 4.2% in September, and thereafter fall back downwards.
Alternatively, it is possible to look at the line from January to April as representing a continuous straight line in which inflation is climbing at about a .5% rate per month. If this straight line would continue, inflation would climb to about 7% in December.
Federal Reserve Chairman Bernanke and President Obama are testing out three economic theories at the moment:
Comment by M, 5/17/2011:
During the selection process of the next Federal Reserve Chairman, maybe the politicians could request the candidate swear to some type of monetarist "Hippocratic Oath" to do no harm.
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