Fed’s Barkin watching goods-services cost divide

Richmond Fed President Thomas Barkin told reporters after a speech overnight that the December CPI report was “about as expected. He noted a deceleration in the price rise for goods, while shelter and services costs continue to escalate at a more robust pace.

Barkin highlighted the growing disparity between the costs of goods versus shelter and services. He expressed caution about this divide, emphasizing the importance of vigilance in this area.

“This gap between services and shelter and goods is one that I am watching carefully,” he stated. His concern is rooted in the potential consequences of a shift from deflationary cycle in goods to a scenario where the economy is predominantly burdened by the rising costs of shelter and services.

“You would not want a goods deflationary cycle to end and find yourself disproportionately bearing the cost of shelter and services,” Barkin said.