SBE Council Chief Economist Statement on Inflation

Today, Raymond J. Keating, chief economist for the Small Business & Entrepreneurship Council (SBE Council), issued the following statement regarding the U.S. Bureau of Labor Statistics release on the July 2008 Consumer Price Index (CPI) data:

"According to the latest data, consumer price inflation is running red hot. Over the past year, CPI inflation hit 5.6 percent. And over the past three months, the annualized inflation rate was a breathtaking 10.6 percent."

"These are the kinds of inflation numbers that we experienced from the late 1960s into the very early 1980s - America's worst period of inflation. Even more troubling is that this is not just inflation, but stagflation. The economy is in a slow growth or no growth mode, while inflation is running extremely high. It is critical to understand that rising oil prices, for example, are not the cause of inflation. Inflation is all about monetary policy gone awry. It's about the Federal Reserve failing to do its job, that is, to maintain price stability. The Fed has to stop trying to be everything to everyone, has to stop attempting to manage economic growth, and has to get inflation under control.

"To get the economy back on track, it is clear we need sound monetary policy to quell inflation, and pro-growth tax and regulatory relief to spur growth."