The inflation data

Most economists agree the spike in energy prices is the main culprit behind the recent surge in headline inflation data in the U.S. The Consumer Price Index (CPI) hit a 14- year high at 4.7 percent in September. However, the core rate (which excludes food and energy) for the month posted a more moderate reading of 1.9 percent.

“Almost nothing outside of energy looks that threatening,” notes Lehman’s Harris.

What economists and the Fed will be watching for in the coming months, however, are signs that higher energy costs are being passed along as price increases in other areas of the economy.

Consumers have already seen some relief on the energy front as of mid-November, as both gasoline and natural gas prices had retreated off their September and October highs, which could bode well for inflation numbers into the New Year.

“Energy prices are unlikely to spike a lot higher,”
Kasriel says. “You’ll see inflation moderate going forward.”