Capital Comments: What Kind of Inflation Problem Do We Have?

We’ve got an inflation problem. What should we do about it? That depends on what kind of inflation problem we’ve got.

In May the consumer price index was 4.9% higher than it was 12 months before. The last time we saw an inflation rate that high was July 2008. The last time it was that high, and it was more than just rising gasoline prices, was October 1990. It’s the highest inflation rate in almost 31 years.

Inflation has increased these past three months, March through May. Partly that’s because the 12-month rate compares to March through May 2020, when prices were falling. That means the 12-month inflation rate would register high even if prices were just getting back to normal.

It’s more than that.

Learn more.

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