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Inflation and Prices

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The roller coaster of retail prices continued in March, when the Consumer Price Index (CPI) jumped an annualized 4.1% following February’s 2.7% rise. Over the past three months, retail prices have advanced at a 3% annualized pace, twice the CPI’s growth rate in 2001. Do recently accelerated retail price increases signal that inflationary pressures are building? Perhaps. But for most economists, inflation has two defining characteristics that distinguish it from just any price rise: It must be broadly diffused across prices, and its advance must be persistent.

Suggested citation: "Inflation and Prices," Federal Reserve Bank of Cleveland, Economic Trends, no. 02-05, pp. 02-03, 05.01.2002.

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