Treasury Secretary Janet Yellen told Congress on Tuesday that inflation has been very high ahead of the Labor Department's latest CPI reading, but many analysts think it's likely to come down on a year-over-year basis. One of the biggest indicators of inflation, labor market tightness, and supply chain woes may have peaked, is Yung-Yu Ma, chief investment strategist at BMO Wealth Management. The CPI report showed that inflation had cooled to 8.3% in April, down from 8.5% in March. Consumers may not feel relief in their wallets if the inflation rate continues to decline even though the annual inflation rate continues to decline.
ING's chief international economist, James Knightley, said this week he believes March 2022 will have marked the peak for annual inflation, but he predicted that the descent back to the Federal Reserve'sFederal Reserve's target rate of 2% will be long and slow. Mark Thornton, a senior fellow and chair in Austrian economics at the Mises Institute, agrees and adds that the descent could be painful.
Thornton told FOX Business he would be surprised if CPI inflation would return to 2% or even close to it. While the CPI index is a smooth data series, reversing the trend will require reversing the economy by tanking stocks, handicapping businesses, and choking off jobs. He said the Fed had to do this to stop the price inflation that their own monetary inflation is causing.