Good for the economy?: Inflation is finally perking up

Since the recession, the Federal Reserve has been trying to do something that may seem counterintuitive: push inflation higher.

Sure, flat to modest price increases are better for consumers, leaving them more money for discretionary purchases. But little or no inflation over a prolonged period is a sign of a weak economy and gives shoppers little reason to buy stuff today since they know it won't be much more expensive in the months ahead. That can hurt consumer spending.

The good news for economists is inflation is finally picking up a bit, largely because of moderately rising oil and gasoline prices. That helped push overall annual inflation rate to 1.6% in October, up from 1.1% in August, according to the Labor Department's consumer price index.

Core inflation, which excludes volatile food and energy items, dipped to 2.1% in October from 2.2% the previous month as airline fares fell sharply. The Fed’s inflation target is 2%.

Employers added solid 178,000 jobs in Nov.

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Economists expect the Labor Department to report Thursday that inflation, including food and energy, rose to 1.7% last month due to higher gasoline prices, while core prices firmed to 2.2%, as airline fares rebounded and rent and medical costs continued to climb.

More significantly, bond yields have risen lately on anticipation of stronger inflation ahead. President-elect Donald Trump's fiscal stimulus proposal -- including tax cuts and infrastructure spending -- along with the prospect of rising oil prices on OPEC production cuts have fueled expectations of more rapid price increases in coming years.