Inflation: Everything Everywhere But Less So

And the Academy Award for the Biggest Economic Surprise of 2022 goes to . . . inflation. It has defied Fed expectations by being both transitory and persistent: Consumer goods inflation has been transitory, while consumer services inflation has been persistent. In any event, overall measures of consumer inflation continue to moderate. Consider the following:

(1) The New York Fed’s consumer expectations survey was released on Monday with February’s results. It shows that the Fed has succeeded in lowering inflationary expectations. The one-year-ahead series is down from a peak of 6.8% during June 2022 to 4.2% in February (chart). The three-years-ahead annualized series is down from a peak of 4.2% during October 2021 to 2.7%.