Two months of sharply rising prices have raised concerns that record-high government financial aid and the United States Federal Reserve’s ultra-low interest rate policies – when the economy is already surging – have elevated the risk of accelerating inflation.
In May, consumer prices rose 5.0 per cent from a year earlier, the largest such year-over-year jump since 2008.
Many economists see the recent spike as temporary. Others say they worry that higher consumer prices will persist. Jason Furman, a Harvard professor who was President Barack Obama’s top economic adviser, thinks the reality is more complicated. He does, however, lean towards the higher-inflation-will-persist camp.
Furman notes that while most economists expect inflation to slow from its current quickened pace, not all think it will fall back to the Fed’s preferred level of 2.0 per cent a year.
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