Fed Governor and Vice Chair Nominee, Philip Jefferson, has given a sobering assessment of the ongoing inflationary pressures that US economy is wrestling with. In a speech, he highlighted that, while inflation has decreased significantly since last summer, the high levels persist and progress in mitigating them appears to be slowing.
Jefferson made it clear that tackling inflation remains a substantial challenge. He stated, “While inflation has come down substantially since last summer, it is still too high, and by some measures progress has been slowing.” Moreover, he underscored that “outside of energy and food, the progress on inflation remains a challenge.”
The Vice Chair Nominee then offered a more granular perspective on core inflation, distinguishing between core goods inflation, housing services inflation, and nonhousing services inflation.
Jefferson noted, “Core goods inflation fell sharply over the second half of 2022 as supply-chain bottlenecks eased, but more recently it has stabilized at around 2.6 percent.”
Housing services inflation, which includes rent and the equivalent for owner-occupied homes, was another key point of discussion. He pointed out that “Housing services inflation, which is 8.2 percent on a 12-month basis. Housing is a big part of inflation, and while rent increases on new leases have come down considerably over the past year, it will take some time for this softening in rents to show through to the 12-month changes.”
As for nonhousing services, the largest component of services, inflation remains stubbornly high at around 4.5% with no substantial decrease in sight.
