2022, Laurence Ball, "Measuring Inflation During the Pandemic"

The rate of increase in the US Consumer Price Index during 2021 was the fastest in nearly three decades. There is an active debate about the cause of the acceleration in inflation that coincided with the second year of the COVID-19 pandemic, and about the implications of rising prices for both monetary and fiscal policy. The questions of how inflation is measured, and how much different inflation measures differ in recent months, have received less attention. In a new study (29609), NBER research associate Laurence M. Ball and Daniel Leigh, Prachi Mishra, and Antonio Spilimbergo of the International Monetary Fund summarize the disparities between several inflation measures. They find that the rise in the CPI inflation rate in 2021 was accompanied by an increase in the dispersion of the goods- or services-specific rates of price change. Inflation measures that exclude the most volatile CPI components rose less in 2021 than headline CPI inflation. Ball summarizes the study's findings in the video above. An archive of NBER videos on pandemic-related research may be found here.