Past and present inflation are more similar than you think by Marijn A. Bolhuis, Judd N. L. Cramer, Lawrence H. Summers published by VOXEU (6/2022).
Housing inflation in the US before 1983 was measured in a way that made the Consumer Price Index (CPI) mechanically responsive to Fed policy, leading to artificially high peaks and fast declines in CPI inflation. To better contextualise the current run-up in inflation to a 40-year high, this column presents new historical series for CPI headline and core inflation that are more consistent with current practices and expenditure shares for the post-war period. Using these series, the authors find that current inflation levels are much closer to past inflation peaks than the official series would suggest.
