April 12, 2021
(The monthly Consumer Price Index (CPI) is scheduled for release by the Bureau of Labor Statistics on Tuesday, April 13th at 8:30 AM Eastern Time.)
In March, we should be seeing more of the bounce back in prices that fell sharply during the pandemic. For example, airfares were 25.6 percent below their year-ago level in February, and in fact were reported as falling 5.1 percent that month. Hotel prices were down 17.2 percent from year-ago levels and fell 2.7 percent in February. Clothes were 3.6 percent below their year-ago level, and auto insurance prices were 2.8 percent lower.
The success of the vaccination program resulted in more people going out to restaurants and traveling in March, a trend that is picking up speed this month. As a result, these price declines are likely to be reversed in the months ahead.
We may also see some additional temporary inflation as some sectors, like restaurants, are facing short-term supply constraints. With many restaurants still having limited seating capacity because of the pandemic, and others having gone out of business, we may see some price increases as many restaurants will be seeing more customers than they can deal with. The situation will become more normal as pandemic constraints are removed and new restaurants replace the ones that went under, but for the near-term we may see some inflation in this sector.
There also has been a recent uptick in the price of medical services, driven largely by higher prices for doctors’ services. This likely reflects people returning to doctors’ offices for check-ups and other care they put off because of the pandemic. This inflation is also likely to prove transitory.
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