The latest Consumer Price Index report indicates that inflation has stabilized, but we cannot assume we've seen the last of inflation. While prices of energy, apparel and durable goods have decreased, food and shelter prices continue to rise. Further, while supply-side factors such as the pandemic or the Ukraine war can cause temporary changes to the price level, excess demand in the economy is what causes persistent inflation. To correct it, the Fed must tighten monetary policy and get nominal GDP growth under control.
