Demand driving fall in US inflation – San Francisco paper
Economic sectors sensitive to Covid-19 saw big drop in demand, researcher finds
The majority of the recent decline in US core inflation can be explained by a strong fall in demand, research published by the Federal Reserve Bank of San Francisco finds.
Core inflation fell from 1.9% in February to 0.9% in April, its lowest level since 2010.
Adam Shapiro examines the pandemic’s impact on inflation by dividing core personal consumption expenditures (PCE) price index into “Covid-sensitive” and “Covid-insensitive” groups. He then studies the separate roles of supply and demand
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