Do rising used car prices mean inflation is coming?

So far, the sharp increases in these pandemic-popular segments have been offset by even sharper declines in the cost of categories most affected by covid 19-related travel restrictions, such as international airfare (down 28 percent from February of last year to this January) and spectator sports (down 18 percent).

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Powell and other economists also say it's not useful to compare inflation dynamics of the past with today's. The economy has changed so much since the 1970s and 1980s, they say, with globalization, technology and other forces combining to slow price growth.

A more globalized economy made it harder for businesses to raise wages or prices, since competitors and consumers could easily find a cheaper place to make a good or deliver a service. More advanced technology only quickened that shift.

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For years now, inflation has fallen short of the Fed's 2 percent target, even as the unemployment rate ticked lower and lower after the Great Recession. That reality spurred the Fed to reevaluate the connection between a tight labor market and rising prices. Economists had long believed that, as the labor market tightened and employers raised wages to compete for scarce workers, prices would rise as businesses passed high labor costs onto consumers. But such a relationship largely failed to materialize during the most recent expansion -- the longest in U.S. history.