I recall there being some debate on this last year but overall inflation seems to be at a ~steady 2.5-3% rate since then despite the ensuing rate cuts. Was the effect offset by deflation in other sectors, or did the one time price shift people end up being correct?
Where did we end up landing on tariffs as a one time price change vs a source of ongoing inflation?
byu/Top_Two408 inAskEconomics
Posted by Top_Two408
1 Comment
One time price change doesn’t mean that prices change instantaneously. Price stickiness, existing contracts/relationships, businesses shouldering the costs in the short term, etc will have the price increases occur over a period of time. This doesn’t imply a long term shift in inflation rates, but over the short term it’ll make inflation look higher ceteris paribus. Looking at rate cuts and inflation numbers in conjunction is still incomplete as we don’t know what those rate cuts and inflation would’ve been without tariffs.