Price inflation in US may linger into 2023

WASHINGTON – For months, many economists had sounded a reassuring message that a spike in consumer prices, something that had been missing in action in the U.S. for a generation, wouldn’t stay long. It would prove “transitory,’’ in the soothing words of Federal Reserve Chair Jerome Powell and White House officials, as the economy shifted from virus-related chaos to something closer to normalcy.

Yet as any American who has bought a carton of milk, a gallon of gas or a used car could tell you, inflation has settled in. And economists are now voicing a more discouraging message: Higher prices will likely last well into next year, if not beyond.

On Friday, the government reinforced that message with its report that the consumer price index soared 6.8% last month from a year earlier – the biggest 12-month jump since 1982.

And the sticker shock is hitting where families tend to feel it most. The price squeeze is escalating pressure on the Fed to shift more quickly away from years of easy-money policies. And it poses a threat to President Joe Biden, congressional Democrats and their ambitious spending plans.

Consumer price inflation will likely endure as long as companies struggle to keep up with consumers’ prodigious demand for goods and services. A resurgent job market – employers have added 6.1 million jobs this year – means that Americans can continue to splurge on everything from lawn furniture to new cars.

Megan Greene, chief economist at the Kroll Institute, suggested that inflation and the overall economy will eventually return to something closer to normal. “I think it will be ‘transitory,’ ” she said of inflation. “But economists have to be very honest about defining transitory, and I think this could last another year easily.’’