Inflation in the US
Global inflation update—Jan 2021
The January CPI print in the United States showed broad-based inflation pressure—with both durables and services starting the year strong;
The median annualised inflation of all products in the basket increased to about 8½% (from about 4½% in December);
But is January special? Are firms resetting prices at the beginning of the year in light of costs that built in 2021? We look at the distribution of inflation prints since 1968 to try to answer this question.
We noted late last year how the CPI in the United States had evolved over the course of the year, such that “inflation pressures are increasing and increasingly broad-based, with a large share of the basket running above the Fed’s definition of price stability.” As such, it was no longer reasonable to claim that special factors related to the reopening were driving the inflation process.