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US: Start-of-year price resets and US disinflation
The COVID-19 pandemic disrupted the normal flow of economic data. This may be especially important for inflation, where menu costs mean that some price changes have traditionally been postponed until the start of a new calendar year. This “lumping” of price changes into the early part of the year is typically filtered out by standard seasonal adjustment tools, but—as seasonal adjustment factors are conditioned on the pre-COVID decade of low inflation—they may not adequately filter out recent start-of-year price resets. This Global Economy and Markets blog—our fourth—reviews the U.S. inflation data for ... (full story)