An easing of supply chain pressures is driving a reduction in inflation. So said Treasury Secretary Janet Yellen during a Friday January 13 interview with National Public Radio (NPR).
“Some of the supply chain issues that pushed up the price of goods and commodities, those have really turned around,” Yellen said during the interview.
The remarks came a day after the Bureau of Labor Statistics (BLS) reported that falling food and fuel prices pulled the annual inflation rate to a 14-month low of 6.5 percent.
The headline number had fallen for a sixth consecutive month since a recent peak – and 40-year high – of 9.1 percent set in June, and to its lowest level since October 2021, the BLS said in its December Consumer Price Index.
On a monthly basis, the BLS said the overall prices changed little.
“Inflation has really been quite moderate, quite low for the last six months or so, importantly, because of lower energy prices. We continue to see improvement in supply chains. Goods prices have actually been falling,” Yellen said during the Friday interview.
On the supply chain front, port congestion and other supply chain issues eased over the summer. The New York Federal Reserve reported in August that global supply chains had less strain in July than at any point since January 2021.
As PYMNTS reported at the time, that was the third straight month of declines and showed encouraging signs for the economy.
The New York Fed’s Global Supply Chain Pressure Index, which looks at data on shipping costs, delivery times, backlogs and other statistics, had been at a high in December 2021.
Yellen also said during Friday’s interview that while rents continue to rise, she expects them to come down “substantially” over the next six months.
She added there is a path to bringing down inflation while maintaining a strong job market over the next 12 months.
“My priorities would be to see inflation come down to much lower levels and to do that in the context of a job market that remains strong, with jobs readily available for people who want to work,” Yellen said.
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