The snarls show no obvious signs of easing, and although Fed officials still think inflation will fade, they are increasingly concerned that supply disruptions could last long enough to prompt consumers and businesses to expect higher prices. If people believe that their lifestyles will cost more, they may demand higher compensation — and as employers lift pay, they may charge more for their goods to cover the costs, setting off an upward spiral.
Wages are already heading up, though typically too little to fully offset the amount of inflation that has occurred this year. There are notable exceptions to that, including in leisure and hospitality jobs, where pay has accelerated faster than prices.
The Fed aims for 2 percent inflation on average over time, which it defines using a different but related index, the Personal Consumption Expenditures measure. That gauge is released at more of a delay, and has also jumped this year.
Central bankers have said that they are willing to look past surging prices because the gains are expected to prove transitory, and they expect long-run trends that had kept inflation low for years to come to dominate over time. But they have acknowledged that rapid price gains have lasted longer than they had expected, and have expressed wariness.
“I believe, as do most of my colleagues, that the risks to inflation are to the upside, and I continue to be attuned and attentive to underlying inflation trends,” Richard H. Clarida, the central bank’s vice chair, said in a speech on Tuesday.
Fed officials are already planning to soon dial back their $120 billion in monthly asset purchases, a process often called tapering and the first step away from crisis-era policy. The Fed’s more traditional tool, the federal funds rate, remains set to near zero and is expected to stay there for some time.
The fact that the Fed is poised to begin tapering could mean that it will be more nimble if it does have to raise rates to control inflation next year.