The Labor Department reported today that inflation, as measured by the Consumer Price Index (CPI), increased 0.5% compared to last month, down from 0.9% in June and 0.7% in May. The largest year-to-year price increases continue to be in sectors related to the economy reopening. At the same time, prices are increasing more slowly, especially when compared to previous months, for core goods and services. 

In light of this report, experts agree that the recent price increases are transitory and manageable. Here’s what they’re saying: 

Josh Bivens | Research Director, Economic Policy Institute

“The “transitory” view of inflation (which I hold) definitely is supported by today’s data. Further, the fact that inflation looks set to come back to more-normal levels before it has spilled-over in any obvious way across the wider economy is big news. 

In short, the mid-year inflation spike is real, but largely contained. It continues to be far, far too early to think the data merit serious Fed tightening right now. The recovery is going quite well – we should keep fostering it, not trying to weigh it down.”

Paul Krugman | Nobel Laureate in Economics and Op-ed Columnist, New York Times

“TEAM TRANSITORY — I like it and plan to steal it. This report does look like what you’d expect if recent inflation was about transitory disruptions, not stagflation redux.” 

Mike Konczal | Director of Macroeconomic Analysis, The Roosevelt Institute 

“Third month of core inflation slowing down in all the industries not directly impacted by the pandemic and autos (“other”). CEA made a distinction between the two months ago, and it held. Price pressures in supply-chains are fenced in, and haven’t expanded to impact other sectors.”

Seema Shah | Chief Strategist, Principal Global Investors 

“Today’s CPI data should help assuage investor fears that the Fed is too laid-back about inflation pressures…The details of the data release suggest some easing in the reopening and supply-shortage driven boost to prices, and tentatively suggests that inflation may have peaked. Investors in the transitory camp will feel slightly vindicated.”

Rakeen Mabud | Chief Economist, Groundwork Collaborative 

“We’re inevitably going to see inflation fearmongering in response to the CPI report, but don’t be fooled. The costs of a slow, piecemeal & exclusionary recovery far outweigh the costs of temporary, contained, manageable inflation.”

Learn more below and email press@groundworkcollaborative.org to speak to Dr. Rakeen Mabud about the latest CPI numbers and what they spell for our economic recovery. 

ADDITIONAL BACKGROUND

• The best way to prevent inflation is to make big investments now. The most effective way to control inflation in the long run is to invest more in our communities and increase supply. This will reduce costs and prices in the long run and ensure that no one is left behind during the recovery period and beyond. 
• Temporary bottlenecks related to the end of the pandemic and the reopening of the economy are driving higher prices. Rising prices that indicate returning demand for travel and other goods and services are a sign of economic recovery. 
• Despite strong job growth in July, 5.7 million jobs are still missing and more investment is necessary to achieve full employment, create quality jobs, and restore our long-term economic potential, especially for Black and brown communities who have always been left out of periods of economic recovery. 
• All signs point to transitory, contained inflation. Prices are not rising as rapidly and major drivers of recent inflation, including price increases for car sales and transportation, are slowing down. Prices in airfare and transportation have actually experienced a slight drop in prices compared to last month. 

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About Groundwork Collaborative

The Groundwork Collaborative’s mission is to advance an economic vision for strong, broadly shared prosperity and true opportunity for all. Learn more at https://groundworkcollaborative.org/ and follow us on Twitter @groundwork.