Kiplinger’s latest forecast on inflation iStockphoto By David Payne, Staff Economist October 11, 2019 GDP Unemployment Interest Rates Inflation Business Spending Energy Housing Retail Sales Trade Deficit GDP 2019 growth will be 2.3%; 1.8% in 2020 More » Jobs Job gains of about 170,000 per month in ’19 More » Interest rates 10-year T-notes staying around 2% until trade war ends More » Inflation 2.1% in ’19, up from 1.9% in ’18 More » Business spending Up just 2% in ’19 amid uncertainty of trade war More » Energy Crude trading from $50 to $55 per barrel in December More » Housing 3.5% price growth by year-end ’19 More » Retail sales Growing 4.3% in ’19 (excluding gas and autos) More » Trade deficit Widening 7%-8% in ’19 More » The overall inflation rate dropped in September to 1.7% because of another fall in energy prices. However, further drops are unlikely, so headline inflation in future months ought to stabilize at around 2.1%. Core inflation, which excludes the costs of food and energy, will continue to run higher, at about 2.5%. An 18.8% surge in health insurance costs is supporting the higher core rate. It is almost entirely responsible for the jump in medical services inflation to a 4.7% rate, which is considerably faster than last year’s modest 2.7% rise. Price increases for physicians’ services and prescription drugs, by contrast, have been modest. See Also: All Our Economic Outlooks By year’s end, shelter costs will have risen 3.4%, up a tad from the 3.2% increase in 2018. Food prices will be 1.4% higher, though recent increases have been minimal because China has not yet increased its buying of agricultural products from the United States. Prices could pick up a bit if the United States accepts China’s compromise offer to buy more ag goods. The prices of all other commodities will be 0.9% higher, on average — a pickup from 2018’s 0.3% gain because of tariffs. Other services will be 1.7% more expensive in 2019, down from last year’s 2.4% increase. Advertisement Lower overall inflation will enable the Federal Reserve to cut interest rates again on October 30. SEE ALSO: Print-Ready Consumer Price Index Chart Source: Department of Labor, Inflation Data