by Daniel Lacalle
Mises.org
Price inflation is rising, but it has nothing to do with tariffs. It has everything to do with the Fed’s policy and the Treasury’s uncontrolled spending.
The Core PCE Price Index, which excludes food and energy, rose by 0.2 percent this month and remains stubbornly high at 2.8 percent annualized. The headline PCE Price Index increased by 0.3 percent, the first 0.3 percent monthly increase in eight months. This has pushed the annualized increase to 2.55 percent, the highest in seven months.
Obviously, this price inflation trend has nothing to do with tariffs but with the fact that government spending soared 10 percent in 2024, and money supply growth is at a two-year-high.
The Federal Reserve created price inflation in 2020 when money supply growth rose at its fastest pace in decades to finance the enormous increase in government spending and perpetuated inflation, keeping an ultra-loose policy for two more years.