by William J. Luther
The American Institute for Economic Research
Inflation is once again on the decline, new data from the Bureau of Economic Analysis (BEA) show. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annual rate of 3.9 percent in March. It grew at an annualized rate of 5.1 percent in January and 4.0 percent in February.
The renewed disinflation is certainly better than the alternative. But it is nonetheless difficult to celebrate: inflation remains well above the Fed’s 2-percent average inflation target. Prices today are 8.9 percentage points higher than they would have been had they grown at an annualized rate of 2.0 percent since January 2020.