New York Times columnist and economist Paul Krugman, writing Monday, June 21, 2021: “for those paying closer attention to the flow of new information, inflation panic is, you know, so last week. Seriously, both recent data and recent statements from the Federal Reserve have, well, deflated the case for a sustained outbreak of inflation.”
The news this morning: “A key inflation indicator that the Federal Reserve uses to set policy rose 3.4 percent in May, the fastest increase since the early 1990s, the Commerce Department reported Friday.”
Yes, yes, the article continues, “though the reading could add to inflation concerns, Fed officials continue to insist that they see the current situation as temporary and likely to abate as conditions return to normal.” And a common argument is that this recent batch of price comparisons are skewed because the numbers from a year ago – when the pandemic’s economic effects were at their most intense – are so unusual.
All inflation surges are destined to end sometime. But the consumer price index started jumping in March. How many consecutive months of price increases do we need to agree that it is a “sustained outbreak of inflation”?