Inflation has cooled for the last year for nearly everything from clothing to healthcare to recreation. Consumer prices rose by just 1.3 per cent in the last 12 months. This is half the pace seen in earlier 2012. The slowdown is also seen in the core index which is less volatile.

Policy-makers are always scared by very low inflation rates because it raises the chances of economic shock.

Ben Bernanke, the current Fed Chairman reported that inflation must rise before Fed stops its program of buying bonds. The aim of the program is to lower interest rates to allow businesses to take on new workers or expand.

Related article: http://www.reuters.com/article/2013/08/23/us-usa-economy-inflation-analysis-idUSBRE97M05B20130823