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Oil Prices and the Economy: How Are Oil Prices Affecting Inflation?
Lower oil prices earlier this year pulled down headline inflation. What will happen to inflation if prices stay low? Laurel Graefe, director of the Atlanta Fed's Regional Economic Information Network, recent addressed that topic.
Transcript
Lower oil prices toward the beginning of the year really pulled down headline inflation considerably. We saw actual outright declines in headline consumer price indices. Toward the beginning of the year, however, I think it's important to keep in mind that inflation is determined not by actual price levels but by changes in prices. So even if oil prices stay low, as long as they don't continue to decline, their influence on inflation should level out.