As the owner of a Yonkers auto dealership, Dwight McGuirk sees firsthand evidence that the economic boom the U.S. enjoyed through most of the year may be coming to an end, CBS News Correspondent Randall Pinkston reports. Probably a little bit in September, but the whole month of October was quiet. November sales were also down for America's big three car makers. The government measures inflation with the Consumer Price Index, which is a measure of the cost of a basket of goods that an average American might buy. The causes of inflation are often mysterious.
Inflation can have wide-ranging effects.
First, it makes business decisions and investments uncertain. If prices are changing, it's tricky for two firms to enter into a long-term contract. It's also difficult for people to plan for retirement, because they can't be sure how much their money will buy. Inflation hurts people on fixed-incomes because it means they can buy less. It tends to discourage saving and investment because when inflation hits, people rush to buy things before prices go up further.