Inflation in America is proving hard to bury

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CHART 1 • Inflation in America is proving hard to bury

The real message here is not that US inflation came down after its 2022 peak. It is that the final stretch back to normal has been stubborn. The Bureau of Labor Statistics said annual consumer price inflation was 2.8% in February 2026, still above the Federal Reserve’s 2% target, while Reuters reported that New York Fed president John Williams expects headline inflation to run at about 2.75% this year and to move above 3% in the near term because of the recent energy shock.

That matters because inflation no longer looks like a clean post pandemic story. It is becoming a story of repeated disruption. First came Covid, then the supply shock, then the energy surge, and now another geopolitical jolt has arrived just as price growth was edging closer to target. Reuters reported that Federal Reserve officials are increasingly worried that higher energy costs linked to the Iran conflict could keep inflation elevated for longer.

What this suggests is that the easy phase is over. Getting inflation down from 9% was painful but achievable once supply chains normalised and rates rose sharply. Getting it from roughly 3% to 2% may be harder, because at this level even relatively small shocks matter. Inflation is lower than it was, but it is not yet tamed.

Source: Bloomberg

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