It’s hard to rationalize that higher prices might be just what the economy needs to push the recovery along.
The Federal Reserve says a little more inflation could create a job-creating chain reaction. A price-cutting season could damage the economy and see companies cutting jobs at just the wrong time.
The government said consumer prices inched up less than 1 percent for the year that ended in March. That matched a 44-year low.
The Fed this week issued a statement that didn’t mention the word “deflation” but did signal concern that low inflation might lead to price drops, according to the Associated Press.
In deflationary times, workers earn less, profits shrivel and stocks generally take a bath. Debt goes unchecked while foreclosures and bankruptcies rise.