WASHINGTON (AP) — Federal Reserve Chair Jerome Powell on Tuesday responded to concerns from Republican lawmakers about spiking inflation by reiterating his view that current price increases will likely prove temporary.
Consumer prices jumped 5% in May compared with a year earlier, the largest increase in 13 years.
Powell said in testimony before a congressional oversight panel that recent price gains mostly reflected temporary supply bottlenecks, and the fact that prices fell sharply last spring at the onset of the pandemic, which make inflation figures now, compared with a year ago, look much larger.
Lumber futures surged to unprecedented heights, peaking at more than $1,600 per thousand board feet in early May.
But since then, the prices of those same plywood sheets and pressure-treated planks have tumbled, as mills restarted or ramped up production and some customers put off their purchases until prices came down.
Other price gains have occurred in categories such as used cars, airplane tickets, and hotel rooms, Powell said, where demand has soared as the economy has quickly reopened, catching many companies flat-footed.
“Those are things that we would look to, to stop going up and ultimately to start to decline as these situations resolve themselves,” Powell said. “They don’t speak to a broadly tight economy — the kind of thing that has led to high inflation over time.”
