But current inflation dynamics are being driven by some pandemic-specific factors not seen in the historical data. It follows that policymakers need to look at a broader range of factors to understand recent inflation dynamics. -6Let me illustrate this point by considering three large categories that make up core personal consumption expenditures inflation.
These are core goods inflation, housing services inflation, and inflation in core services excluding housing. It’s useful to look at these three categories separately because the driving forces behind each differ. Some of these forces are pandemic specific, and understanding the different causes should help us predict what will happen to inflation going forward.