Inflation’s Wild Ride
Inflation has surged and moderated since the pandemic. As the presidential election approaches, politicians are focused on who is to blame. How did we get here?
Coming into and through 2019, the economy was strong and the Consumer Price Index, a key measure of inflation, was low. For some, that seemed like a bad thing — economists worried that chronically low inflation could increase the risk of future economic stagnation.
In early 2020 — as the economy stalled with the spread of Covid-19 — the C.P.I. plunged. The Personal Consumption Expenditures index, a slightly delayed price measure that the Fed uses for its 2 percent inflation target, similarly fell.
In early 2021, President Biden ushered in a large stimulus package, which included one-time checks of $1,400. The aid, which former President Donald J. Trump previously suggested, followed major relief packages passed by his administration.
Some economists warned that the government was pumping too much money into the system, and that the fresh round of aid to households and state governments risked igniting inflation.
