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In December 2007, the consumer prices rose by 0.3 percent, which was a down turn from the increase of 0.8 percent in November 2007. In 2007, energy price increased 17.4 percent and food prices increased 4.9 percent, which is the biggest increase since 1990. The only consumer item that reduced its prices in 2007 was apparel with decrease of 0.3 percent in 2007.
In December 2007, the core prices increase 0.2 percent and there was an overall increase of 2.4 percent of the entire year. This increase excluded the costs of volatile food and energy costs. The core prices rose by 0.2 percent in December 2007. This was a reduction from 2006 wherein the core prices was 2.6 percent.
For the monetary policy, it gave the Federal Reserve some room to go ahead cut the interest rates without worrying about inflation. This was done with the view of spurring growth.
The United States has a different method of computing inflation compared to the rest of the world. When the nation calculates inflation, it does it in three primary ways which are hedonic quality adjustments, calculations of housing costs via owners’ equivalent rent and finally geometric weighting or product substitution. The changes in these three areas have constantly given the United States lower inflation rates, which have not always given the accurate picture of inflation in the country.
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Inflation is primarily the decrease in the market value of money. Many consumers see inflation as increase in prices of goods and often applies to a specific region with regard to a specific economy. Inflation also sees an increase in overall supply of money and this process is known as monetary expansion. 
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