NEW YORK, June 7 (Xinhua) — U.S. inflation is running even closer today to its 1980 peak, fresh analysis of historical price data showed, suggesting to the authors of the study that the Federal Reserve’s task of bringing price gains back to its target is similar in scale to that of then-Chair Paul Volcker, reported Bloomberg on Monday.
After adjustments, the figures showed that core inflation ran at an estimated 9.1 percent in June 1980, versus the reported peak of 13.6 percent, said the paper by economists Marijn A. Bolhuis, Judd N. L. Cramer and former U.S. treasury secretary Lawrence Summers, who recalculated historical readings for the consumer price index to apply modern-day spending patterns.
“That means that the aggressive monetary tightening that Volcker implemented in the early 1980s brought the core inflation rate down by 5 percentage points – not by the 11 points in the official annals,” said Bloomberg in its report about the study.
“And that in turn suggests the Fed’s job today is of a scale closer than previously thought to Volcker’s – which involved a deep recession,” it added.
In April, the U.S. core CPI rose 6.2 percent. Fed policy makers target a 2 percent inflation rate, although that’s tied to a separate gauge of prices that averages somewhat less than CPI. Economists forecast the May core CPI figure, due Friday from the Bureau of Labor Statistics, at 5.9 percent, according to the report.