Inflation Fears Are Overblown
There’s a lot of talk about the quickening pace of price increases and the wreckage it can leave. I don't buy it.
Worried? Nah.
Photographer: Al Drago/The New York TimesTime to stop trash-talking inflation. Forecasts for a decent pickup in the pace of price increases ought be welcomed, and we’re a long way from the bad old days of the 1970s.
While measures of U.S. inflation gained at the end of last year, they are well below levels desired by the Federal Reserve. In China, consumer prices unexpectedly fell 0.3% in January from a year earlier. Japanese officials sometimes sound like they have given up on their 2% goal. Even in Southeast Asia, where growth has historically been faster than the developed world, price movements are anemic. South Korea flirts with deflation; Malaysia and Thailand endure it.
Market gauges do show inflation coming back: 30-year Treasury yields topped 2% last week for the first time in a year; U.K. government bonds slid and oil rallied. The idea is that an economic recovery, assisted by massive fiscal and monetary stimulus, will lift consumer prices off the floor. Unfortunately, this is often described with fear-mongering language like “surge,” “breaking out,” “warning” and even “the end of largesse.” This skates past lessons from the decade preceding the Covid-19 pandemic. Far from being a harbinger of doom, a spurt in prices would count as policy triumph.