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Inflation (price change) is important for REALTORS® because changes in prices in the economy can lead to shifts in interest rate policy by the Federal Reserve Bank. During the recent financial crisis, fears of deflation were present in news reports (deflation can lead downward spiral of prices that destroy an economy similar to what happened in the Great Depression). The deflation talk has quieted, but inflation has become a growing concern. Some fear that stagflation will take hold with the current weakness in the job market (high unemployment and high inflation). This situation can be very difficult for the Fed to combat inflation due fear of further job market deterioration.
February 2011 key factors:
- Producer prices showing signs of inflation, consumer prices are more tame, but higher than expected
- Underlying inflationary pressures seen in commodity prices
- Oil / energy prices are increasing
- Gold, other metals and commodities prices high
- Dollar is weak, however some are forecasting it to rise this year. A weaker dollar makes imported goods more expensive and adds to inflationary pressure
To download additional Inflation Watch charts, click "inflation Watch" on the Housing and Economic Indicators page.
Notice: The information on this page may not be current. The archive is a collection of content previously published on one or more NAR web properties. Archive pages are not updated and may no longer be accurate. Users must independently verify the accuracy and currency of the information found here. The National Association of REALTORS® disclaims all liability for any loss or injury resulting from the use of the information or data found on this page.