![]() ![]() The potential for wider and more lasting price pressures have put Fed officials on edge. “Housing - that is the key broadening,” said Laura Rosner, an economist at MacroPolicy Perspectives. Rents, which make up a big chunk of inflation, are rising at a solid clip. That’s why policymakers were comfortable dismissing high inflation for a while: It came from kinks that seemed likely to eventually work themselves out.īut price gains are increasingly coming from sectors with a less clear-cut, obviously temporary pandemic tieback. Inflation had been low for years leading up to 2021, and pandemic-era lockdowns and the subsequent reopening are behind much of the current price pop.Ĭonsumer demand surged just as rolling factory shutdowns and a reshuffle in spending to goods from services caused manufacturing backlogs and overwhelmed ports. There are plenty of differences between 1982 and today. Today, interest rates are set at near-zero after policymakers slashed borrowing costs at the beginning of the pandemic. Back then, Paul Volcker was the Fed chair, and he was waging a war on years of rapid price gains by pushing interest rates to double digits to cripple business and consumer demand and cool off the economy. data set for release on Friday is expected to show that inflation picked up by the most since 1982. or the change in the cost of things that people consume either out of pocket or through government payments and insurance, which is tracked by the less-timely Personal Consumption Expenditures index.īoth measures are way up this year, and C.P.I. When economists and policymakers talk about “inflation,” they typically mean the increase in prices for the things that people buy out of pocket - tracked by the Consumer Price Index, or C.P.I. consumer price inflation figures are released on Friday. Here is a rundown about what to know about the price pops sweeping America and the world - and what to expect when new U.S. More worrisome for the Fed is that inflation is broadening to many products and services, not just those directly affected by the supply chain woes that have driven up prices for cars and electronics. The Consumer Price Index could show that inflation picked up by 6.8 percent over the past year, the fastest pace in nearly 40 years. “I think the risk of higher inflation has increased,” he said.Ī fresh report set for release on Friday is expected to reinforce that concern. Powell, the Fed chair, said that while his basic expectation is that price gains will cool off, there’s a growing threat that they won’t do so soon or sufficiently. ![]()
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