Federal pricing data released this week for consumer and producer prices shows that inflation rose last month.
Harvard professor and former economic advisor to President Barack Obama Jason Furman said the consumer data could show a “resurgence of inflation” not to the ultra high levels in recent years but to more recent elevated data.
That means getting inflation back down to the levels last seen during the Trump administration and before COVID-19 may not be doable in the near future.
“Core CPI came as expected, but the expectations were pretty high,” Furman said after the data was released. “It looks like either some resurgence of inflation or – more likely – it never went away.”
Core CPI includes the change in the prices of consumer goods excluding food and energy prices.
“Overall inflation has been better than core because energy prices have been falling and food price growth has normalized,” Furman wrote on X. “This has been great for consumers but it not that relevant in projecting inflation going forward. We don’t think energy will keep falling.”
Inflation rates have fallen significantly from their breakneck pace earlier in the Biden-Harris administration but has not disappeared as many hoped. Furman said despite the fall from rapid inflation in recent years, “the last mile” of getting inflation down has proven difficult.
“But part of the issue in the last two months is that core goods prices have started to rise,” Furman said. “I had been skeptical that they would continue to fall the way they had and hold down inflation in the way they had. Hopefully my skepticism will be proven wrong – but so far it hasn’t been.”
The U.S Bureau of Labor Statistics released new data Thursday showing that producer prices had risen 0.2% in October, part of a 2.4% increase in the last 12 months.
That data comes on the heels of Wednesday data showing a 0.2% rise in consumer prices, part of a 2.6% increase over the previous 12 months.
“The index for shelter rose 0.4 percent in October, accounting for over half of the monthly all items increase,” BLS said. “The food index also increased over the month, rising 0.2 percent as the food at home index increased 0.1 percent and the food away from home index rose 0.2 percent. The energy index was unchanged over the month, after declining 1.9 percent in September.”
