Good News on Inflation during October, but It’s Still Too High: CEI Analysis

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The consumer price index did not increase from September to October, according to newly released government numbers. But because core CPI is still higher than last year, the Fed still has more to do to wrangle inflation, says CEI Senior Economist Ryan Young:

“The CPI’s increase in October was zero, and its total increase over the last year is down to 3.2 percent. This is all good news, but there are concerns just under the surface.

“Sharp declines in energy and car prices mean that prices elsewhere still increased. And those price declines have more to do with healing energy supply chains and a glut of car inventory than with the real issue, which is monetary inflation.

“Core CPI, which gives a better picture of monetary inflation, is still at 4.0 percent over the last year — double the Fed’s 2 percent target.

“It is safe to say that 9 percent inflation is not coming back, barring another pandemic-scale spending spree. But the Fed still has more to do on inflation control. Fortunately, a growing economy and strong employment numbers give them plenty of room to work.”