The Federal Reserve has long set its target for inflation at 2 percent, and by some measures, we have arrived there. According to a report from the Labor Department last week, the consumer price index has risen by 2.1 percent over the past 12 months.
On the other hand, the Fed prefers to use the Commerce Department's price index for personal consumption expenditures. Unlike the CPI, this index tries to adjust for the American consumer's changing spending habits, rather than the price of a fixed basket of goods. And this index has risen by just 1.6 percent over the past 12 months.
Whichever measure you choose, it should be noted that economists don't currently expect inflation to get much higher than it already is. The IMF has forecast that inflation in the U.S. is likely to stay below 2 percent through 2017.
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