By Christopher Rugaber
AP Economics Writer
WASHINGTON (AP) After nearly a decade of being all but invisible, inflation, or the fear of it, is back.
Tentative signs have emerged that prices could accelerate in coming months. Pay raises may be picking up a bit. Commodities such as oil and aluminum have grown more expensive. Cellphone plans are likely to appear costlier.
The specter of high inflation has spooked many investors, who worry it would force up interest rates, making it costlier for consumers and businesses to borrow and weighing down corporate profits and ultimately the economy. Historically, fear of high inflation has led the Federal Reserve to step up its short-term interest rate increases.
It’s a big reason investors have dumped stocks and bonds in the past two weeks.
Yet for all the market turmoil, inflation for now remains quite low: Prices, excluding the volatile food and energy categories, have risen just 1.7 percent in the past year. That’s below the Fed’s target of 2 percent annual inflation.
Most economists expect inflation to edge up and end the year a few tenths of a percentage point above the Fed’s target. But most foresee only minimal effect on the economy.
“I don’t think that’s a huge tragedy,” said Mark Vitner, an economist at Wells Fargo Securities.
Inflation, though, is hard to forecast. One widely followed gauge is the government’s monthly report on consumer price inflation. The January CPI report will come out Wednesday.
Here are some ways to track the direction of inflation in the coming months:
HOW MUCH DOES YOUR CELLPHONE PLAN COST?
Roughly a year ago, major wireless carriers like Verizon and AT&T began offering unlimited wireless data plans. This enabled their customers to watch more video, stream more music and trade more photos. It also lowered inflation.
That’s because government statisticians don’t simply review price changes when they calculate inflation. They also try to measure what consumers actually receive for what they pay. Because unlimited data plans are a better deal, they in effect lowered the overall cost of wireless phone services. Many economists cited this as a reason inflation slowed last year even as the unemployment rate fell.
Still, the cellphone plans were a one-time change. In March, their impact will pass from the government’s year-over-year inflation calculations. Most analysts expect this change to boost that month’s inflation estimate.
HOW MUCH WILL PAYCHECKS RISE?
There are tantalizing early signs that many employers, grappling with low unemployment and a shortage of workers, are finally raising pay to attract and keep more workers. Average hourly pay rose 2.9 percent in January from a year earlier, the sharpest year-over-year increase in eight years. A separate quarterly measure from the Labor Department showed that wages and salaries in the final three months of last year grew at the fastest pace in almost three years.
In theory, higher pay can lead to inflation: Companies raise prices to offset their higher wage bill.
But it doesn’t always work that way. Pay climbed at a 4 percent annual clip in the late 1990s, for example, and yet core inflation barely rose. It edged up to about 2.6 percent from 2.3 percent.
Companies can choose to eat the extra cost and report lower profits. They could also use the proceeds from last year’s tax cut to pay higher wages even while keeping prices in check.
HOW PLENTIFUL ARE WORKERS?
Another factor that may keep wages low and limit inflation is that plenty of workers are still available overseas. Companies could shift work abroad if pay gets too high.
And there may be more people in the United States available to fill jobs than the low 4.1 percent unemployment rate would suggest. The proportion of Americans who have jobs still hasn’t returned to its pre-recession peak.
WHAT DO CONSUMERS EXPECT?
Whether consumers expect inflation to accelerate or stay the same can become a self-fulfilling prophecy. Once consumers’ inflation expectations pick up, they typically demand higher pay, which can lead companies to raise prices to cover the costs.
That makes expectations of inflation an important gauge to watch. And yet such expectations have changed little this year, which could keep inflation in check.
According to the Federal Reserve Bank of New York, consumers think inflation will be about 2.7 percent a year from now. Last April, consumers expected inflation to be 2.8 percent in a year.
HOW MUCH ARE YOU PAYING IN RENT?
As millennials flooded cities and postponed home purchases, rents soared from Seattle to New York. Yet builders also constructed thousands of new high-rises. And there are signs that rents are leveling off. More young people are also starting to buy homes, which lowers demand for rental apartments.
This could help lower inflation over time. In December, rents rose 3.7 percent from a year earlier. While that’s faster than paychecks are rising, squeezing many renters, it is still below the recent peak of 4 percent, reached in December 2016. That was the highest in nearly a decade.
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“He said, ‘Can all of my colored students stand up and can we have a round of applause for them?”, said Newark High School student Janaeya Emmanuel.
LAKE CITY, FLORIDA: Formerly of Newark, NY and Rochester, NY. John Richard (Dick) Chase, 94, entered eternal rest on Tuesday, February 13, 2018. J. Richard was born the son of the late Cecil G. and Ethel (Molye) Chase on Monday, March 12, 1923 in Newark, NY. He graduated from Newark High School class of 1941. He received his Bachelor of Arts in Economics from the Wharton School of Business, University of Pennsylvania, in 1947. Dick was a WWII Navy Veteran, graduated from the Columbia College-Navel Midshipman School in NYC and served on the USS Menard (APA 201) and USS Henrico (APA 45). Dick was a Certified Public Accountant. He retired from Blue Cross & Blue Shield of Rochester, NY as Acting CEO, culminating his 33 year career. Dick was a past member of the Musical Box Society and the American Coaster Enthusiasts (ACE). He was a lifelong music lover; particularly, big band and classic jazz music. He was also the former owner of Chase’s Family Restaurants, Inc. Dick is survived by his beloved wife, Noreen (Sweeney) Chase; daughter, Laura Chase (Dominic) Martin; son, Dr. Thomas R. (Marilyn Graham) Chase; his former wife, mother of his children and dear friend, Anna Mary Chase; daughter-in-law, Joanne Burritt Chase; granddaughter, Christiana Chase (Sean) Jones; nieces, Mary Kay Pelow Birch and Judy Pelow Welkley; adopted sister, Katherine Jean Austin; and nephew, Roy Austin. Dick was predeceased by his son, John Gilbert Chase and his sister, Betty Chase Pelow. Family and friends may attend a Graveside Service with full military honors on Friday, March 9, 2018 at 11:30 a.m. in Newark Cemetery. In memory of Dick, in lieu of flowers please consider donations to your local Humane Society. The funeral home proudly flies the Navy Flag in honor of his service in the United State Navy. You may write a memory or condolences to the family by visiting watermanfuneralhome.com
EDWARDS/MARION: Mrs. Caroline L. Webb, age 87, formerly of Edwards, passed away February 22, 2018 with her family by her side. Caroline was born on August 23, 1930 in Talcville to the late Albert and Maude (Sparling) Skeldon. She attended the Talcville School and the Edwards High School. Caroline married Herschel E. Webb on October 15, 1950 at the Edwards Methodist church officiated by Rev. Hull. Herschel passed away on December 12, 1991. Mrs. Webb was a child/health care provider and house-keeper for several families in the area. She also had worked at the Edwards Central School in janitorial and house-keeping at the Custard Cottage Motels in Gouverneur. She was a former member of the Gouverneur United Methodist church and the Rebekah Lodge in Edwards. She enjoyed spending time at their camp in Russell, playing cards and doing jigsaw puzzles. Her survivors include four children, Darlene Webb, Cheryl (Frederick) Hoerter, Dale (Vikki) Webb and Barry (Susan) Webb; her twin brother Clarence (Audrey) Skeldon, brother Allen (Bonnie) Skeldon, sisters Beatrice McEathron and Eleanor Boulier, sister in law Olive Hosmer. She is also survived by grandchildren Rodney, Samantha, Morgan, Alex, Maxine, Anthony, Katie & Andrew, 9 great-grandchildren, 1 great-great grandson, many nieces and nephews. Also, extended Canadian family Cliff & Alice Vanalstien and special friends Betty & Bonnie from Drumlin Estates. In addition to her husband and parents, Caroline is predeceased by brothers, Lennis, Edmond, Douglas, Harvey and James Skeldon. Sisters Grace Fuller and Celinda Vrooman. Also, Darlene’s companion Nelson Perrault. Donations in memory of Caroline may be made to the Edwards Volunteer Fire Department or the Wayne County Hospice. Calling hours will be held at French Funeral Home in Edwards on Tuesday, February 27, 2018 from 12:00 – 1:30 p.m. followed by her funeral service at 1:30 p.m. with Rev. Beth Quick officiating. Burial will follow in the Fairview Cemetery.
LYONS: Age 52 entered eternal rest on Monday, February 19, 2018 at Newark-Wayne Community Hospital. John was born the son of Howard L Sr. and Ellen L (Johnston) Washburn on Saturday, January 22, 1966 in Syracuse, NY. His last employer was Pacemaker Steel & Piping in Manchester, NY. John enjoyed dirt track racing, jet skiing, photography. But he had a huge passion for supporting our military troops. He was a past member of Newark VFW. The funeral home proudly flies the U.S. Army flag in honor of John’s service to our country in the reserves and active duty he had served 33 years. He was deployed 5 times, serving in Bosnia, Kuwait, Iraq twice and Afghanistan. John will be remembered by his wife, Michele Washburn; daughters, Kayla Washburn and Kristin Washburn; granddaughters, Aubrey King and MaKinleigh Washburn; mother, Ellen Washburn; brother, Howard L (Melinda) Washburn Jr; one nieces and one nephew, and many soldiers he had served with over the years. John was predeceased by his father Howard L. Washburn Sr. in 2008. Family will greet friends Monday (February 26) from 5 to 8 p.m. at the Norman L. Waterman Funeral Home, Inc., 124 W. Miller St, Newark. Burial, with military honors in Bath VA Cemetery on Tuesday (February 27) at 1 p.m. In memory of John, in lieu of flowers please consider donations to AAP, Adopt A Platoon, PO Box 234, Lozano, TX 78568. You may write a memory or condolence to the family by visiting watermanfuneralhome.com
RALEIGH, NC: Age 24, of passed away on February 19, 2018 in Raleigh. Jordan was born in Auburn, NY to Earon and Michelle on October 14, 1993. He went to school at North Rose Wolcott. He worked as a personal caregiver for Davon Davis for 4 years. Jordan is survived by his mother, Michelle and husband, Omar Njie of Clayton, NC; his father, Earon Learo and wife, Tara of North Rose, NY; sister, Caitlyn Learo of Reno, NV; grandmother, Lona Campbell of Wolcott, NY; grandparents, Gary and Dorreen Learo of Sarasota, FL; great-grandmother, Wilma Bedwell of Belmont, NY and several aunts, uncles and cousins. For full obituary and online condolences, please go to mclaurinatpinecrest.com