True, most economists believe that the current unemployment rate of 4½ percent is below the level consistent with stable inflation, and indeed may already be exerting upward pressure on labor costs. But almost all sensible economists have long realized that unemployment is not the only influence on inflation.
As I have emphasized, the strong dollar has led to falling prices for our imports, and low oil prices have led to low prices for gasoline and other energy products. Low oil prices also have helped hold down prices for petroleum-derived products like fertilizers and plastics, and they have reduced price pressures more generally by reducing firms’ utility and transportation costs.