Commentary
After some encouraging news last summer and fall, many began anticipating a quick end to the economy’s inflation problem.
Federal Reserve (Fed) Chair Jerome Powell even suggested that he might not have been so wrong in 2021 when he declared the inflationary pressure “transitory.”
The news from January contradicts this optimism. The Labor Department reported that consumer prices rose 0.5 percent in January, 6.2 percent stated at an annual rate, and that producer prices rose by 0.7 percent, 8.7 percent stated at an annual rate. Neither says anything good about the inflation situation.
Of course, one month’s data alone does not make a trend. But there is ample reason to expect more such troublesome inflation news when the January report is set against the pattern of 2022—both its periods of intensity and relief—and the detail behind the summary figures. That news will demand still more counter-inflationary policy from the Fed and, hopeless as it seems, some support for counter-inflationary policies in Congress and from the White House….
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