Please enable JavaScript to view the comments powered by Disqus.

Economic Forecasts

Inflation to Creep Up Next Year

Kiplinger's latest forecast on inflation

GDP 1.4% growth for the year; a 2% pace in '17 More »
Jobs Hiring at 150K-200K/month through '16 More »
Interest rates 10-year T-notes at 1.9% by end '17 More »
Inflation 1.8% for '16, 2.4% in '17 More »
Business spending Flat in '16, slight gain in '17 More »
Energy Crude oil trading from $40 to $45 per barrel in Dec. More »
Housing Prices up 5% in '16, 6% in '17 nationally More »
Retail sales Growing 3.4% in '16 and '17 (excluding gas) More »
Trade deficit Widening 4% in '16 More »

Look for small increases in energy prices to boost inflation to 2.4% at the end of 2017, from 1.8% at the close of this year.

Core inflation, which excludes food and energy, will also end 2017 at 2.4%, up just a tick from the 2.3% rate we expect this year. The modest pickup in the core inflation rate will likely help spur the Federal Reserve to raise interest rates a quarter of a percentage point once or twice next year.

See Also: All Our Economic Outlooks

Prices of groceries will decline a bit but the price of eating out will rise in 2017. Greater competition in the grocery business next year and lower import prices for food will tamp down grocery prices, while restaurant prices will rise at the rate of inflation and perhaps a bit more. Restaurant costs are determined more by the cost of labor than the cost of food. Worker wages will rise faster in 2017 than they have recently, as the labor market in general tightens.


Health care costs are going to go up — again. Cost pressures are ramping up in this sector, particularly for hospitals. Health insurance costs will rise by 4% to 6% for employer plans, and up to 9% for the Obamacare exchange plans. Prescription drug price inflation will ease slightly from its 7% rate, but only because many price increases have already taken place.

The cost of keeping a roof over your head will rise 3.7% in 2017, up from 3.5% in 2016. Shortages of homes for sale in many metro areas will keep upward pressure on rents. Also rising again next year: The prices of college textbooks, up another 5% to 7%.

SEE ALSO: Print-Ready Consumer Price Index Chart

Source: Department of Labor, Inflation Data