Christopher J Waller-必需品通胀率-食品、能源和住房通胀-BIS

February023rreleaseondeliveryFebruary023TheInflationRateforNecessitiesALookatFood,EnergyandShelterInflationksbypherJWallererBoardofGovernorsoftheFederalReserveSystemArkansasStateUniversityAgribusinessConferencesboroArkansasThankyouBertandthankyoufortheopportunitytotalkaboutwheretheeconomyisheadingwhattheFederalReserveisdoingtogetinflationbackdowntoourllthatislikelytoaffectAmericanagricultureThebigpictureisthattheUSeconomyisadjustingwellsofartothehigherinterestratesthatarenecessarytoreinininflation.Butinflationremainsquiteelevated,andsomoreneedstobedone.Althougheconomicactivityslowedin2022,IexpecttheFedwillneedtokeepatightstanceofmonetarypolicyforsometimetoslowactivityfurtherin2023.ThatiswhatIbelieveisneededtobringdemandandsupplyintobetteralignmentandlowerinflationtowardtheFederalOpenMarketCommittee’s(FOMC)2percenttargetSomebelievethatinflationwillcomedownquitequicklythisyear.Thatwouldbeawelcomeoutcome.ButI’mnotseeingsignalsofthisquickdeclineintheeconomicdata,andIampreparedforalongerfighttogetinflationdowntoourtarget.SowhatismytakeontherecentdataItlooksliketheeconomygrewatasolidpaceinthefinalquarteroftheyear,thelabormarketremainedtight,andinflationcontinuedtoretreat.Afteradjustingforinflation,personalconsumptiongrewatarounda2percentrate,thoughitcontractedinthelasttwomonthsoftheyearamidsomeprettysignificantheadwinds.Oneofthoseheadwindswashighinflationincludingforfoodandagriculturalproducts.Afteraccountingforinflation,spendingonfoodconsumedathomefellin2022afterrisingstronglyin2020and2021,theeffectofbothlargepriceincreasesover1IamgratefultoKatiaPenevaforassistanceinpreparingtheseremarks.Theseremarksrepresentmyownviews,whichdonotnecessarilyrepresentthoseofmycolleaguesontheFederalReserveBoardandtheFederalOpenMarketCommittee.2-thepastyearandthenormalizationofspendingongroceries,whichsurgedwhenpeoplestayedhomeduringthepandemicandreversedwhentheyreturnedtorestaurants.LookingforwardIexpectpersonalconsumptionwillgrowmodestlyandpriceincreaseswillmoderateandIthinksuchoutcomeswouldbodewellfortheagriculturalsectorthisyearItlooksasthougheconomicactivitymaybemoderatingfurtherinthefirstquarterof23,butIexpecttheU.S.economytocontinuegrowingatamodestpacethisyearsupportedbyastronglabormarketandbyencouragingprogressinloweringinflation.ThoughwehavemadeprogressreducinginflationIwanttobecleartodaythatthejobisnotdone.InflationisstilltoohighrelativetothepricestabilitygoalofthedualmandateassignedtotheFederalReservebyCongress.TheFedhasdefinedthatgoalas2percentannualinflation,asmeasuredbythechangeinthepriceindexforpersonalconsumptionexpenditures,butanotheryardstickyoucoulduseiswhenhighpricesforgroceriesandotherthingsarenolongerfrontpagenews,andwhenfarmerscanworrylessaboutrisingcostsforfertilizerandotherinputs.Thatiswhereweintendtogetto,andthustheFOMClastweekincreasedthetargetrangeforthefederalfundsratebyanother25basispoints,to4½to4¾percent.Ourintentionistotightenfinancialconditions,includingraisingthecostofcredit,todampendemandandspendingtofurtherreduceinflation.Ofcourse,weknowthathigherinterestratesposechallengesforfarmersandrancherswhomustborrowtosmoothoutthecostsandreturnsfromagricultureovertheyear.Butexcessiveinflationisalargerchallengebecauseithasthepotentialtobecomealastingproblemweighingoneconomicgrowthundermininglivingstandards,andhurtingconsumers,whofarmers3-dependonThatiswhyIamdeterminedtogetthejobdone,gethighinflationoffthefrontpages,andbacktobeingsomethingthathouseholdsandbusinessesdon’tthinktoomuchaboutwhenmakingdecisions.Continuedupwardpressureoninflationcomesinpart,fromaverytightlabormarketTheJobOpeningsandLaborTurnoverSurveyforDecembercontinuedtoshowthatthedemandforworkersremainsrobust,withjobopeningsincreasingbyover00,000attheendoflastyear.BasedonlastFriday’sinitialestimate,welearnedthattheU.S.economycreatedawhopping517,000jobsinJanuary,330,000morethanthesolidgrowththatwasexpectedbyeconomicforecasters.Furthermore,theunemploymentratetickeddownto3.4percent,thelowestlevelsince1951.ploymentgainsmeanlaborincomewillalsoberobustandbuoyconsumerspending,whichcouldmaintainupwardpressureoninflationinthemonthsaheadForemployers,theverystronglabormarketmakesithardtofindandretainworkersOneeffectofthistightnessisseeninwagesandothercompensation,whichultimatelyshowupinthepricesthatconsumerspayforgoodsandservices.Forexample,lastyeartheEmploymentCostIndex(ECI),whichtracksmovementsinlaborcostsincludingbothwagesandbenefits,increasedover5percent,thehighestratesince1984.Wewanttoseewagesgrowbutatapacethatisconsistentwithourgoalofstableprices.WehaveseensomemoderationincompensationgrowthinrecentmonthsbutnotenoughTheECIforhourlycompensationforprivateindustryworkersincreasedatanannualrateofpercentoverthethreemonthsendinginDecember,astepdownfromthepercentgainrecordedoverthethreemonthsendinginSeptemberandthe6.3percent4-increaseinJunebutstillastrongincrease.Morerecently,the12-monthchangeinanarrowermeasureoflaborcosts,averagehourlyearnings,wasabout4½percentinJanuarycontinuingitsslowdecelerationfrom5½percentlastsummer.ThedataaremovingintherightdirectionbutIwillwatchforfurtherslowingbecausewedon’twantexcessivewageincreasestobeapotentialsourceofhigherinflationinthefuture.SonowletstalkaboutinflationIwillstartwithoverallinflationandthenfocusonthedifferentcomponents,includingfood.IwilltalkaboutwhatthosecomponentscantellusaboutthedirectionofoverallinflationandhowIlookatthedifferentpartsofinflationinmyapproachtomonetarypolicy.Figure1depictsinflationmeasuredbytwocommonindexes.Nomatterhowonemeasuresit,inflationhasbeenrunningtoohotfortoolong.“Overall”or“headline”inflationindexesaremeasuredastherateofincreaseintheaveragepricelevelofabroadgroupofgoodsandservices,calledamarketbasket.Governmentstatisticsontheinflationratewillbeafunctionofthespecificgoodsandservicesincludedinthemarketbasket.Includingadifferentsetofgoodsandservicesinthemarketbasketwillresultinadifferentoverallinflationrate.Probablythemostoften-discussedinflationmeasureintheUnitedStatesisonebasedontheconsumerpriceindex(CPI).TheCPIiswidelyusedasacost-of-livingindextoadjustSocialSecurityandotherpayments.TheCPIputsconsiderableweightonthepricesoffood,energy,andshelter.Thesethreeitemsaccountforabout50percentoftheexpendituresintheCPIbasket.22Foodathome,energyandhousingrepresent49percentoftheCPIbasket,whereasallfood,energyandhousingare54percentofthemarketbasket.5-AsecondmeasurethatisfrequentlywatchedistheoneImentionedearlier,thepersonalconsumptionexpenditures(PCE)priceindex,whichplaceslessweightonfood,energyandshelter—theymakeupabout30percentoftheexpendituresinthePCEbasket.TheFOMCchosethePCEindexovertheCPIforitsinflationtargetinpartbecauseitincludesabroadersetofgoodsandservicesinitsmarketbasketandiswidelybelievedtobettercapturechangesinthemixofgoodsandservicespurchasedbyconsumers.Monetarypolicyworkswithalag,andaftertheFederalReservestartedraisinginterestrateslastMarch,inflationpeakedinthemiddleof2022andhasbeenfallinggraduallysincethen.Twelve-monthPCEinflationhitahighof7percentinJunebutendedtheyearat5percent.Bycomparison,overthefinalthreemonthsof2022,headlineinflationwasmuchlower,runningatanannualizedrateofjust2.1percent.Thedifferencebetweenthethree-monthand12-monthschangesisasignalofongoingmoderationAshasbeenthecasesincethesummer,fallingenergypricesareabigreasonforlowerinflationinthelastfewmonths,thoughfoodpriceinflationalsomoderatedinthefinalfewmonthsof2022.Theseimprovementsarewelcomenewsbutweneedtokeeptheminperspective.Aswecanseeinthefigure,thoughPCEinflationisdownfromitspeak,itisstillquiteelevatedAndwhiletherecenttrendisencouraging,theimprovementsoverthepastyearhavebeencominginebbsandflowsanditlikelywillcontinuethisway.Ineedtobeconfidentthatinflationisdeclininginasustainedmannertowardsour2percenttarget,soIwillneedtoseecontinuedmoderationininflationbeforemyoutlookchanges.6-SowheredoIthinkinflationisheadingYouwilloftenheareconomiststalkaboutcoreinflation,whichstripsoutenergyandfoodprices,whichtendtobevolatile.Thecoremeasureisconsideredabetterguidetothedirectionoffutureinflation.YoumightwonderwhyitisthattheFeddoesn’tjusttargetcoreinflationinmeasuringprogresstowardourpricestabilitygoal.Therearesomegoodreasonsforkeepingthefocusonoverallinflation,andinfrontofanaudienceofpeoplewhopayalotofattentiontofoodpriceinflation,IthoughtIwouldtakeacoupleminutestoexplainwhyIconsiderfoodandallofthecomponentsofinflationtobesoimportantinmyapproachtosettingmonetarypolicy.Theargumentforstrippingoutfoodandenergypricesisthattheytendtobequitevolatilewithbigupsanddownstendingtoequaloutovertime,andthusdonotprovideaclearsignalofhowinflationinthesecategorieswillevolve.Onecanseetherecentvolatilityinfigure2thatreports12-monthratesofinflationforfoodandenergy.Energypricesweredecreasingformostof2020(theyfell10percentduringthatperiod)butthenswitchedtoverylargeincreasesin2021andthefirsthalfof2022.Inmid-2022wesawenergypricesupabout40percentfromtheyearbefore.ByDecember,thatretracedtolessthanapercentincreaseover2021.AndI’msureIdon’thavetotellanyonethatfoodinflationhasbeenquitehighrelativetoitspre-pandemicaverage.Ofcourse,foodpriceshaven’tincreasedasmuchasenergyprices,butfoodinflationhasrisennotablyin2021and2022andhasbeenrunningabove10percentrecently,whichisunusuallyhigh.Iknowthatfarmershavebeendealingwithsharplyrisinginputcosts,andthatisasignificantfactordrivingupwholesaleandretailpricesformanyfoodproducts.Asshowninfigure3,inflationforagriculturalchemicals,suchasfertilizer,skyrocketedin7-andcontinuedupinearly2022and,thoughthisinflationhasmoderatedinrecentmonths,thepricelevelofagriculturalchemicalsremainsveryhigh.CoreinflationasshowninFiguredidn’triseasmuchasheadlineinflationinthisrecentperiodofhighfoodandenergypriceincreases,andlatelyithasn’tmoderatedasmuchCoreinflationstoodat4.4percentinDecember,overdoubletheFed’s2percenttargetforheadlineinflation.Coreinflationincludesameasureofhousingservices,whichiswhathouseholdspayforrentortheequivalentforthosewhoowntheirhomes.Housingservicesinflationhasbeenstubbornlyhighforallof2022andisabigfactordrivingupcoreinflation.Thereisgoodreasontobelieverentswillmoderatesignificantlyoverthisyearandsosomepeoplehavesuggestedthatthefocusshouldbeona“supercore”measureofinflationthatexcludesfood,energy,andhousing.Thatwouldmakeinflationlooknotnearlyasbadoverthelastyearortwoandalsolikelynotshowmuchimprovementinthecomingmonths.ButthereareafewreasonswhyIdon’tletthesestripped-downmeasuresofinflationshapemyviewsoftheinflationenvironment.First,yes,historicallyfoodandenergypriceshavebeenvolatile,andithasnotbeenunusualtoseepriceincreasesfollowedbypricedeclinesoverfairlyshortperiodsoftime,butthatisn’ttherecenthistoryInthelasttwoyears,pricesforthesegoodsandserviceshavebeenmovinglargelyinonedirectionupandeventhedeclineinenergypriceswesawinthesecondhalfof2022hasn’toffsetthehugeincreasesearlier.ThesecondreasonthatIwouldn’texcludefood,energy,andhousingprices,orwanttomovetowardanarrowerinflationtarget,isthat,byanymeasureofheadlineinflation,theyconstitutealargeshareofexpensespaidbypeople.Excludingthislarge8-reofconsumerspendingdoesntgiveyouanaccuratepictureofwhatconsumersarefacingintheireverydaylivesandthatisaperspectivethatpolicymakersshouldneverforget.Thethirdreasontoincluderatherthanexclude,thesepricesinconsideringinflationisthattheymakeupanevenlargershareofexpensesforlower-incomepeople,whohavelesssavingsandothermeanstodealwiththeupsanddownsoftheirfinancesandtheeconomy.Recentresearchindicatesthattheshareofoverallspendingthatlower-incomehouseholdsdedicatetofoodenergyandhousingisabout1.2times(or20percentmorethanthesharespentbyhigher-incomehouseholds.Becauseofthisdisparity,wheninflationpeakedlastsummer,lower-incomehouseholdseffectivelyfacedinflationthatwasapercentagepointhigherthanwaspaidbyhigher-incomehouseholds.3Lastlyandthisisreallythebottomline,theFedhasstatedthatitstargetforinflationisheadlinePCEprices.So,tomeettheFed’spricestabilityobjective,policymakersareaccountingforallthecategoriesofgoodsandservicesthataffecthouseholds.Withthatcontextletmetakeafewminutesoneachofthethreebigcategoriestohighlighthowtheyhavebeenmoving,andIthinkthereissomegoodnews.Let’slookateachcategoryintheorderofhowmuchconsumersspendonthemeachmonth.Housingservicesareabout15percentofthePCEbasket.Figure5showshowhousinginflationhasbeenevolvingbothwhenmeasuredona12-monthbasis(leftpanel)and3-monthbasisrightpanel.AsIjustnoted,housinginflationhasbeenstubbornlyelevated.Thisistrueifyoulookatinflationoverthepastyearorjustatrecentmonths.Buthigh3BasedonworkbyJakeOrchard(2022)thatmatchesconsumptionspendingbyincomewithCPIdata.See/sol3/papers.cfm?abstract_id=40335729-frequencymeasuresofmarketrentsfornewleasesbynewtenants)haveslowedsharply,suggestinganupcomingslowingintherateofinflationinthispartofthePCEbasket.Becauserentsusuallydontchangeuntilleasesrunout,theserecentdeclinesinmarketrentinflationwillonlyshowthroughtotheofficialinflationmeasurewithadelay.SoIexpectovertime,thathousinginflationwillmovedowntobemoreinlinewithcoreinflation.Turningtofoodwhichrepresentsabout7.5percentofconsumptioninthePCEbasketfigure6showsthatthe12-monthchangeinPCEfoodpriceshasgreatlyoutpacedthatofcorePCEinflationoverthepastcoupleofyears.Morerecently,wecanseethatthe3-monthchangeinthePCEpriceindexforfoodhasslowedconsiderably,whichisagoodsign.Butfoodinflationisstillabovetheaverageannualpaceof1.1percentoverthetenyearsprecedingthepandemic.Thisongoingelevatedfoodinflationlikelyreflectspassthroughofthepaststrongincreasesinfoodcommodityprices,risinglaborandfuelcostsaswellassupply-chainbottlenecksinpackagingandtransportationthathavelimitedsuppliesamidstrongdemand.Forexample,asseeninfigure7,spotpricesforcattleandsoybeansarewellabovetheirlevelsattheonsetofthepandemic,likelyboostedbythesharplyrisinginputcostsfarmershavebeenfacing,whichIdiscussedearlier.However,futurespricesforthesecommoditiessuggestlimitedmovementsinthesepricesthroughyearend.Ifthisplaysout,withaslowdowninwageincreasesthatshouldoccurbecauseoftightermonetarypolicy,thisshouldhelpcontinuetomoderatefoodinflationoverthenextfewyears.Finally,let’sturntoenergyinflation.Householdsspendlessthan5percentoftheirPCEbasketongasoline,electricity,andheatingbut,asseenintheleftpanelof10-figuretheenergypriceindexskyrocketedoverthepastcoupleofyears,reflectingasurgeincrudeoilpricesafterthepandemicrecessionwhichwasexacerbatedbyRussia’sinvasionofUkraine.Turningtothe3-monthchange(therightpanel)energypriceshavebeendecliningsharplyrecentlyandweexpectthemtocontinuetodeclinethisyear,reflectingthepathofcrudeoilfuturespricesandtheexpectationthatunusuallyelevatedgasolinemarginswill,onaverage,declineovertheremainderofthisyear.SowhatdoItakeawayfromallthisIthinktherearepracticalimplicationsforgettingaclearpictureoftheeconomyandsettingappropriatemonetarypolicy,andals