Federal Reserve Vice Chairman Richard Clarida said he expects the recent spike in inflation to dissipate as supply and demand imbalances ease and that future price increases in 2022 would cause problems for the central bank.
“I do continue to judge that these imbalances are likely to dissipate over time as the labor market and global supply chains eventually adjust and, importantly, do so without putting persistent upward pressure on price inflation and wage gains adjusted for productivity,” Clarida said in remarks prepared for delivery on Monday.
A series of economic struggles that have grown increasingly worse this year will likely have a significant impact on the holiday season, many economic experts predict.
After President Joe Biden gave remarks from the White House this week, one reporter called out, “Will Christmas presents arrive on time, sir?” The president did not respond to that question or the flurry of others as he walked away from the podium.
A key economic index used by the Federal Reserve to measure inflation surged to another 30-year high in August as Americans continued to experience sticker shock.
The personal consumption expenditures (PCE) index increased 4.3% over the 12-month period ending in August, according to a Department of Commerce report published Friday. The figure represented the index’s highest increase since January 1991 when it surged at an annual rate of 4.5%, government data showed.
Minus energy and food prices, which are notoriously more volatile than other sectors, the PCE index increased at an annual rate of 3.6% in August, the Commerce Department reported. That is also the highest increase in more than 30 years.