Dylan Matthews points out today that despite the predictions of the doomsayers, inflation continues to be nearly nonexistent. According to the BLS, the headline CPI figure stood at zero in July, and core inflation (which excludes food and energy) was at 0.1%.
As it turns out, that zero number is a statistical artifact. The real number is 0.045%, which rounds down to zero. But if you multiply by 12 to get the annualized figure, it's still a very, very modest 0.5%. The chart below shows monthly inflation for 2012, annualized for both headline CPI and core inflation.
So why is the Fed still so concerned about inflation, when it's so well controlled and unemployment is still so high? It is a mystery.