Inflation Rate Forecast

Economic Forecasts

Inflation Relents

Kiplinger's latest forecast on inflation


GDP 2.6% growth in '19 More »
Jobs Job gains about 160,000 per month in '19 More »
Interest rates 10-year T-notes at 2.8% by end ’19 More »
Inflation 2.0% in ’19, up from 1.9% in ’18 More »
Business spending Up 5% in ’19 as global growth slows More »
Energy Crude trading from $60 to $65 per barrel in August More »
Housing 5.35 million existing-home sales in ’19, up 0.2% More »
Retail sales Growing 4.3% in ’19 (excluding gas and autos) More »
Trade deficit Widening 7%-8% in ’19 More »

Inflation pressures eased a bit in May, as prices of used cars and trucks, gasoline, and imported commodities declined. Expect the trend to continue, with further declines in gasoline prices.

Inflation is 1.8% over the past 12 months and 2% for the core rate, which is everything except food and energy. By the end of the year, these rates should bump up to 2% and 2.1%, respectively.

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By year’s end, shelter costs will have risen 3.5%, up from 3.2% in 2018. Food prices will have bumped up 2.2%—their fastest pace in four years— but could slide again if trade tensions with China are not resolved. The prices of all other commodities will be down 0.4%, on average, and medical care services’ costs will jump 2.9%, a little more than last year. Physicians’ services and prescription drug price inflation have been lower than expected. Despite this good news, the cost of health insurance is climbing at a rate of 12%. Other services will be 1.4% more expensive in 2019, down from 2018’s 2.4% increase.


The effect of recent tariff hikes will add only 0.1 percentage point to the inflation rate—and that’s only if the tariffs remain in place for long. The Trump administration is also threatening to extend the 25% tariffs to an additional $325 billion of imports from China. Because most of this latter group would be consumer goods, that would have a larger effect, hiking inflation by an additional 0.4 percentage point. However, it would take some time for price increases to work their way through the system.

The Federal Reserve is more likely to cut rates soon because of reduced inflation. It will be able to boost the economy without having to worry about creating higher inflation. If tariffs do add to the inflation rate, the central bank is likely to look past that, seeing this as a temporary effect.

SEE ALSO: Print-Ready Consumer Price Index Chart

Source: Department of Labor, Inflation Data