, Columnist
Don't Sweat a Temporary Spike in Inflation
Surprising price increases are due to pandemic-related supply and demand issues. They’ll get better.
For clues on consumer price inflation, look to used-car lots.
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July’s surprisingly strong consumer price data may raise understandable fears that inflation is making a comeback. After all, the Fed is aggressively supporting the economy, Congress has allocated trillions of dollars in fiscal relief, and gold has soared to record highs.
But what's really happening is that pandemic-related supply and demand dynamics are distorting price signals in the short term. While we might get hot inflation prints for a few months, we should expect them to get back to normal as production does the same.