Inflation will linger near decade highs until the second half of 2022, Janet Yellen says

Americans hoping price surges would soon cool off will have to wait at least a few more months, Treasury Secretary Janet Yellen said Sunday in an interview with CNN’s Anderson Cooper.

The US economic recovery has generally taken a turn for the better. Daily coronavirus case counts are falling, consumer spending has remained strong, and the unemployment rate continued to decline in September. Inflation, however, remains worryingly high.

Price growth picked up in September, with the Consumer Price Index rising 0.4%. That exceeded the average economist forecast and snapped a two-month streak of slower growth. Where experts thought inflation would ease up into 2022, it’s staying stubbornly high.

The near-term outlook isn’t promising. The world’s energy market remains a mess, and global supply chains are far from fully healed. The decade-high price growth will eventually slow down, but Americans will have to wait until the second half of 2022 to see a major change, Yellen told Cooper.

“I expect that to happen next year,” Yellen said, referring to when inflation will slow. “On a 12-month basis, the inflation rate will remain high into next year because of what’s already happened. But I expect improvement by the middle to end of next year.”

Still, Americans need not worry that inflation is spiraling out of control, the Treasury Secretary added. While the Biden administration and the Federal Reserve expect higher inflation to be temporary, others like former Treasury Secretary Larry Summers have raised concerns that inflation will stay dangerously high.