Paul Krugman’s assertion that “the war on inflation is over” if you exclude food, energy, shelter, and used cars is being mocked online.
The Nobel Prize-winning economist and New York Times columnist posted the comment on his X social media account on Thursday.
“The war on inflation is over,” Krugman wrote in the caption, adding: “We won, at very little cost.”
Krugman attached a graph titled “CPI ex food, energy, shelter and used cars” that showed a declining rate stretching from 7% in January of last year to slightly below 2% in September.
The reaction on X to Krugman’s post was scathing, with critics noting that the Labor Department’s consumer price index (CPI) — the most widely used by economists to gauge prices faced by consumers — factors in those day-to-day living expenses.
“This is fantastic news for all Americans who don’t need food, a place to live, or fuel & electricity,” wrote Tim Murtaugh.
Another X user wrote: “What a joke. The items left out are what people spend the most money on.”
“Paul Krugman is NOT an economist. He is an unabashed propagandist for the Biden regime,” another X user commented.
US inflation rose 3.7% in September, more than economists expected and still well above the Federal Reserve’s 2% target, as the central bank weighs whether to hike interest rates again by year’s end.
In a subsequent post on X, Krugman appeared to walk back his claim.
“I was too flip here,” the Times columnist wrote.
“I’ve been using this particular measure for a while, so want to be consistent. But it has flaws (medical insurance too optimistic). But almost every measure now <3 percent.”
Krugman argued that “we do seem quite close to prepandemic inflation” when factoring in “the whole distribution” of price increases.
To bolster his claim, Krugman cited the personal consumption expenditures price index (PCE), which leaves out food and gas prices.
Krugman wrote that PCE inflation was “closing in on 2 percent.”
“People have been reluctant to call this,” he wrote.
“But the data really want to tell us that inflation has very nearly normalized.”
On a monthly basis, inflation slowed to 0.4% from 0.6% in August, partly because of lower pressure from energy prices.
However, core CPI — a number that excludes volatile food and energy prices and serves as a closely watched gauge among policymakers for long-term trends — held steady at 0.3% month to month and rose 4.1% from a year ago, in line with expectations.
The gasoline index’s 2.1% advance was also a large contributor to the CPI, the data showed, though the federal agency said shelter’s 0.2% increase accounted for over half of the increase.
Additional Reporting by Shannon Thaler