...due to TEMPORARY restrictions, such as border closures, that will be lifted once the pandemic is history.
--
On a related topic, quite a few commenters here have made uninformed or intentionally misleading comments about the relationship between inflation indexes and food/energy prices. Let me quote this explanation posted 10 years ago by a PhD student of economics at MIT:
"Food and energy are not excluded from the Consumer Price Index. The standard CPI, which is used to make cost of living adjustments to Social Security (among other things), reflects a full consumption basket, including food and energy.
The index that excludes food and energy is the core CPI, which is used for a very different purpose -- namely, the U.S. Federal Reserve's decisions about U.S. Monetary Policy.
A few observers seem to believe that excluding food and energy from the core CPI reflects either deep ignorance or conspiratorial neglect on the part of monetary authorities. Nothing could be further from the truth. In fact, core CPI (along with some alternatives like mean-trimmed price indices) is a very sensible reaction to the dilemmas facing monetary policymakers.
Suppose that the Federal Reserve had a mandate to stabilize the full Consumer Price Index, and that food prices suddenly doubled. To keep the CPI at a stable level, other prices would need to decrease. The problem, however, is that many prices are sticky, meaning that they do not instantaneously respond to changes in monetary and macroeconomic conditions. This is especially true in the service industry (which comprises the bulk of both Gross Domestic Product and the CPI).
To create these compensating price changes within a relatively short timespan, the Fed would have to impose extremely tight monetary policy, with sky-high nominal interest rates. And as we saw in the early 1980s, a large increase in nominal interest rates is extremely destructive to the real economy, leading to a massive increase in unemployment. Given our already weak economic conditions, such a policy would be even more damaging today.
Core CPI is a way to prevent this kind of needless suffering and unemployment. By targeting a stabler set of prices, the Fed avoids the wild swings in monetary policy that would inevitably arise from targeting an index that includes commodity prices. In other words, the demagogues who assail core CPI have it all wrong: the average American would be much, much worse off if the Fed targeted a volatile measure like headline CPI."
--
On a related topic, quite a few commenters here have made uninformed or intentionally misleading comments about the relationship between inflation indexes and food/energy prices. Let me quote this explanation posted 10 years ago by a PhD student of economics at MIT:
"Food and energy are not excluded from the Consumer Price Index. The standard CPI, which is used to make cost of living adjustments to Social Security (among other things), reflects a full consumption basket, including food and energy.
The index that excludes food and energy is the core CPI, which is used for a very different purpose -- namely, the U.S. Federal Reserve's decisions about U.S. Monetary Policy.
A few observers seem to believe that excluding food and energy from the core CPI reflects either deep ignorance or conspiratorial neglect on the part of monetary authorities. Nothing could be further from the truth. In fact, core CPI (along with some alternatives like mean-trimmed price indices) is a very sensible reaction to the dilemmas facing monetary policymakers.
Suppose that the Federal Reserve had a mandate to stabilize the full Consumer Price Index, and that food prices suddenly doubled. To keep the CPI at a stable level, other prices would need to decrease. The problem, however, is that many prices are sticky, meaning that they do not instantaneously respond to changes in monetary and macroeconomic conditions. This is especially true in the service industry (which comprises the bulk of both Gross Domestic Product and the CPI).
To create these compensating price changes within a relatively short timespan, the Fed would have to impose extremely tight monetary policy, with sky-high nominal interest rates. And as we saw in the early 1980s, a large increase in nominal interest rates is extremely destructive to the real economy, leading to a massive increase in unemployment. Given our already weak economic conditions, such a policy would be even more damaging today.
Core CPI is a way to prevent this kind of needless suffering and unemployment. By targeting a stabler set of prices, the Fed avoids the wild swings in monetary policy that would inevitably arise from targeting an index that includes commodity prices. In other words, the demagogues who assail core CPI have it all wrong: the average American would be much, much worse off if the Fed targeted a volatile measure like headline CPI."
Source: https://www.quora.com/Why-are-food-and-energy-costs-excluded...