Fed warns that persistent inflation risks becoming a long-lasting “permanent reality” for Americans

Inflation in the United States has remained above the 2% threshold for approximately 65 months, the longest uninterrupted period of its kind in the 21st century, according to data released Wednesday. In September, the consumer price index rose 3.7% from the same month a year earlier, maintaining pressure on households and the Federal Reserve.

Fed officials fear that people and companies are beginning to view high price increases as normal. Beth Hammack, president of the Cleveland Fed, warned that this shift in perception could influence prices and wages, fueling a mechanism in which inflation expectations generate further price increases.

Consumers’ expectations for inflation over the next 12 months rose to 3.9% in September, the highest level in more than three years. Since 2021, average annual inflation has been approximately 4.5%, an intensity not seen in a comparable period since episodes in the 1980s.

The Fed is attempting to reduce pressures through higher interest rates, but the measure makes borrowing more expensive and weighs on households. In some regions, Americans are choosing between buying food and paying bills, while inflation has recently exceeded the pace of wage growth.

Discontent over the cost of living has reduced consumer confidence and could have political consequences ahead of the November parliamentary elections. Economists emphasize, however, that prices will generally not return to previous levels. The objective is for price increases to slow below the pace of wage growth, allowing purchasing power to gradually recover.