There's a lot of concern about whether a weaker dollar could cause higher U.S. inflation, but CNBC’s Steve Liesman says not so fast. Here, he offers a quick overview of different ways to think about the influence of the currency on the inflation process:
Imports vs. Domestic Prices
A look at the year-over-year change of consumer import prices vs. core inflation finds only a modest relationship. There are two reasons for that:
So, what happens to the U.S. economy will determine what happens to import prices. Import prices will not determine what the price levels are in the U.S.