Inflation Increase

Since 1992, there have been four instances when Y-o-Y headline inflation, as measured by the CPI, rose by nearly 4% or more; in 2000, from late 2005 to mid-2006, from Jan-September 2008, when inflation reached 5.5%, and in September 2011. In each of these time periods, core CPI never exceeded 2.9%. Stay alert but don’t panic when the CPI starts to jump. Bottlenecks and pent-up demand are short-run phenomena.