What Historical Inflation Clusters Tell Us

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Is inflation “transitory?” Not if one looks at the historical pattern of inflation clusters.

From 1914 through 2021, there were eight times inflation, as measured by the BLS CPI, reached at least 4%. In six of those eight periods, inflation stayed above 4% for, on average, 3.9 years.

(Source: BLS, Inflation average 3.9%, median 3.5%, 1914-2021)

The graph above shows the yearly inflation rates since 1914, with the red, dashed line representing the average inflation rate. Each of the eight periods are color-coded to distinguish them. In two of the years, 1951 and 1984 (lime green diamonds), inflation did not persist. However, in each of the other periods, inflation lasted from three to 10 years.(Source: BLS, Inflation average 3.9%, median 3.5%, 1914-2021)