Chicago Fed Pres.: Fact That Groceries Are ‘Expensive’ ‘Not Really Going to Change’

On Friday’s broadcast of NPR’s “Morning Edition,” Chicago Federal Reserve Bank President Austan Goolsbee stated that while the May and June inflation reports were “excellent” ones, the frustration that he often hears that “I go to the grocery store. It is expensive. That’s not really going to change.”

Co-host A Martinez asked, “Austan, we’ve heard from a lot of listeners that the positive signs on inflation are not necessarily showing up in their day-to-day lives and that essentials, such as food and rent, still seem pretty painfully expensive. Do you have a sense that that is changing at all?”

Goolsbee answered, “Yes and no. And you could have made it even worse for us or made us more unpopular, in that the Fed looks, not at overall inflation, but primarily at core inflation, which does not include energy and food prices. And then my mom is like, what do you mean you don’t think about energy and food prices? That’s exactly what I think about. But the reason that we look at that core inflation is energy and food prices go way up. They go way down. There’s, like, a lot of variability to them.”

He continued, “So, if you look at core inflation — remember, this is the growth rate of prices. When I talk to people, the frustration that they often express is about the level of the prices. And they’re like, I go to the grocery store. It is expensive. That’s not really going to change. Though it’s a little frustrating, that’s not the goal of the [Fed], which has a dual mandate by law in the Federal Reserve Act, is to maximize employment and stabilize the prices, which we’ve interpreted, in a narrow sense, to be, get the inflation rate down to 2%. That’s the goal of what they’re trying to do, as opposed to trying to roll back the prices to get us to the price level that we were five years ago or something like that.”

Follow Ian Hanchett on Twitter @IanHanchett