Demand issues account for one-third of U.S. inflation spike - SF Fed

Only about one third of the current bout of high inflation in the United States is demand driven, according to research published by the San Francisco Federal Reserve on Tuesday, underscoring the difficulties U.S. central bankers face in bringing inflation to heel.

The Federal Reserve has ramped up the size of its interest rate hikes as it tries to reduce inflation back to its 2% goal, raising borrowing costs last week by three quarters of a percentage point to a range of 1.50%-1.75% as it seeks to cool demand across the economy.

Inflation is currently running at three times that target with a worse-than-expected pricing report earlier this month showing little sign of progress. read more

Supply issues account for around half of the run-up in current inflation levels, San Francisco Fed economist Adam Hale Shapiro wrote in the latest edition of the bank's "Economic Letter," with demand reasons responsible for about one third and the rest a result of ambiguous factors.