ON THE OCTOBER CONSUMER PRICE INDEX
The latest inflation number, 6.2%, should dispel any notion that higher inflation is transitory. Not only are prices higher, but also the increases are dispersed among many different kinds of goods. And with winter coming, surging energy prices, and continued supply shortages, it could get worse. The longer inflation lasts, the more it gets built into longer term contracts and wages—and that could mean inflation stays with us for a few years and drives up the cost of borrowing.
This news tempers any good news about higher wages, because wage increases, for many people, are not keeping up with inflation. Policymakers cannot continue to wish away the problem. Monetary policy may be ill-suited to address supply-driven inflation, but their continued accommodation is not helping.
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Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.