Blog Post

Insight: What Goes Up Must Come Down? The Muddled Post-Pandemic Inflation Picture

By: Phil Dean

Note: The opinions expressed are those of the author alone and do not reflect an institutional position of the Gardner Institute. We hope the opinions shared contribute to the marketplace of ideas and help people as they formulate their own INFORMED DECISIONS™.

More than any time in recent memory, inflation is a hotly debated economic topic. The U.S. Bureau of Labor Statistics’ (BLS) July price change as measured by the seasonally adjusted Consumer Price Index (CPI) shows a 5.3% year-over-year overall increase (5.4% when not seasonally adjusted).

The July reading follows revised CPI growth estimates of 5.3% in June, 4.9% in May, and 4.2% in April. This elevated inflation trend (see Figure 1) has ignited debate about inflation’s future trajectory, focused primarily on whether the increases will be lasting or “transitory” (in the Federal Reserve’s parlance). Higher inflation’s expected duration has critical implications for the federal government’s fiscal policy and the Federal Reserve’s monetary policy.

Figure 1: Year-Over CPI Inflation Rate, January 1970 to July 2021