Inflation; transitory traveller or a more permanent fixture?

There is little doubt that Elvis is in the building, in this case Elvis being elevated data points of price inflation. Central banks are adamant that these data points are merely the result of transitory inflation, and that Elvis will shortly be leaving the building. The chart below is a very clear indication that since the beginning of 2021 prices have been rising, certainly in the context of United States consumer price index (CPI).

Their CPI is sharply higher even when baskets of goods and services that might be considered more “transitory”, such as rent and petrol, are removed from the calculation.

That version of CPI is at its highest level in nearly 30 years. Elvis and his band have definitely started playing some rock and roll music.

To be more accurate then, central banks should really be talking about high but transitory inflation. That could turn out to be what happens but it’s clearly a harder ask than dealing with a bout of moderate short-term inflation.