Inflation in the nation is currently “uncomfortably high” and “worrisome,” Federal Reserve Bank of Atlanta president Dennis P. Lockhart said yesterday.
“No matter how you measure it, the aggregate inflation we are experiencing in the United States at the moment is uncomfortably high,” Lockkhart said according to prepared text of a speech released by the Fed. “Over the first half of this year, the CPI has risen at an annualized rate of nearly 5.5%. Over the same period, the PCE index has risen at an annualized rate of 4.5%. With the surge of energy prices in early summer, the annualized CPI for July was the highest in 17 years.”
He added that while inflation rates “are higher than I would like to see,” he expects recent price increases “more likely to be transitory than persistent,” with consumer price index inflation peaking near the July level of 5.6%. He noted that CPI inflation in March 1980 was 14.8%.
Lockhart concurs with the Fed assessment that inflation will moderate, although the outlook is “highly uncertain,” he said. “Current Fed policy is consistent with an easing in overall inflation given the dynamics of the economy. With weak growth and financial market strains, I believe the most likely outcome is that both headline and core inflation will diminish over the rest of 2008 and into next year as the temporary effects of energy and food price increases abate. Note that my outlook does not require that food and energy prices fall, but simply that their rates of increase moderate.”
