Subject: Re: Krugman on the Fed
That said, I’ve almost never seen nor read of an inflation bump with disappeared quickly. Once the increases get baked in across the full economy they tend not to go away. A single instance can rise or fall (eggs, oil) but if you have a global, common bump, it’s devilishly hard to get it all back into the same 10 ounce can.

For sure.

What's even more pernicious is that even when a bout of inflation ends, people don't believe it. (The recent US spike has been over for a couple of years now, for example--I wouldn't see any reason to think of 2.5%-2.9% as a big issue). One intuitively thinks that when the inflation is over, things will go back to the way they were. From a monetary point of view that may be true, but nominal prices are still up from what one remembers even if they are no longer rising, so it still *feels* like ongoing inflation.

Visiting Canada is quite a shock for me, for two reasons. One, France was almost unique in not having had a really big inflation spike recently. In much of Europe the catalyst was the huge rise in natural gas prices, but they were capped in France, so the general spread through the economy wasn't triggered as strongly. And secondly, I haven't spent much time in Canada in recent years, so my memory of prices is old--every price seems to be a wild surprise! Everything feels like a bit of sticker shock.

Jim