At the beginning of the Korean War, inflation soared and the economy was in a state of full employment. This is the CPI and PPI inflation then and now…
figure 1: CPI-all cities, month-on-month inflation (blue), Cleveland Fed’s July approaching forecast (blue +) and a 70.5 year lag (red). Source: BLS through FRED, Cleveland Federal Reserve, The author’s calculations.
Although the inflation rate in the United States has soared in recent months, it is not as high as it was in the early 1950s. Interestingly, inflation is at a comparable level based on the PPI of all goods (hence, no services, etc.).
figure 2: PPI-all commodities, month-on-month inflation (blue), And lags 70.5 years (red). (FRED series PPIACO). Source: BLS through FRED, author’s calculations.
The interesting point is that although the (old-style) increase in PPI in recent months is comparable to the increase during the Korean War, the increase in CPI is almost no.
