A former Obama administration economist said Thursday that inflation may not easily decrease due to the rise in the median Consumer Price Index (CPI), which reached 8% year-over-year in September.
Jason Furman, chairman of the Obama administration’s Council of Economic Advisers, said the median CPI figure is the “single biggest threat” to his prediction that core CPI inflation would slow to a 4.5% annual rate, he said in a Thursday Twitter thread; core CPI in September increased 6.6% year-over-year and 0.6% from August, beating economists’ expectation. September’s median CPI is the third highest the figure has been since 1982 when data was first recorded, only beaten by June and August of 2022, Furman wrote. (RELATED: Inflation Stays Sky-High As Core Prices Soar Above Expectations)
“Median CPI strips out the volatile categories on either side, so takes away every special story. It is more stable than core CPI which can be volatile month-to-month. It is just as or more predictive of future inflation. And is much better predicted by labor market tightness,” Furman wrote in the thread.
Furman said the increase in median CPI means that forecasters should be “a bit more nervous” in their predictions regarding inflation eventually decreasing.
Overall year-over-year CPI was 8.2% in September compared to 8.3% in August, and month-to-month CPI reached 0.4%, up from 0.1% in August, the U.S Bureau of Labor Statistics reported.
Overall the fact that median CPI is growing at an 8% annual rate–and has steadily risen–is the single biggest threat to my overall expectation that core CPI inflation will be slowing to more like a 4.5% annual rate. pic.twitter.com/BPrFIycHv8
— Jason Furman (@jasonfurman) October 13, 2022
President Joe Biden addressed the September CPI report on Thursday, arguing that because of his “economic plan, the United States is in a stronger position.”
“Today’s report shows some progress in the fight against higher prices, even as we have more work to do. Inflation over the last three months has averaged 2%, at an annualized rate. That’s down from 11% in the prior quarter,” he said.
Biden finished his statement by criticizing Republican congressmen for attempting to repeal the Inflation Reduction Act.
“Republicans in Congress’ number one priority is repealing the Inflation Reduction Act. That’s the exact wrong thing to do in this moment. If Republicans take control of Congress, everyday costs will go up – not down,” he said.
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