NEW YORK ( MainStreet) -- On the inflation front, news is not very good -- unless you choose to see it another way, that is. Knowing how to interpret the newly released government inflation figures is critical to making long-term plans for needs such as retirement.The reason for the confusion: The government issues two inflation numbers. First, the consumer price index -- which the Bureau of Labor Statistics defines as "the measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." That rose 3.9% in the 12 months ending on Sept. 30. That's a serious jump, and quite a bit more than the long-term average of 3%, as well as the Federal Reserve's desired rate of about 2%. If inflation were to continue at the current rate of 3.9% a year, you might expect a $100 item to cost $139 in 10 years.
|The consumer price index rose 3.9% in the 12 months ending on Sept. 30. That's a serious jump, not helped by the fact earnings on cash are extremely low -- just 0.35% for the average one-year certificate of deposit.|