Bernanke: Oil prices not a top inflation concern

Swings in volatile energy and food prices will have minimal impact on inflation as long as inflation expectations are held steady, Federal Reserve chairman Ben Bernanke said today in Cambridge.

‘‘If inflation expectations are well anchored, changes in energy [and food] prices should have relatively little influence on ‘core’ inflation, that is, inflation excluding the prices of food and energy,’’ Bernanke told the National Bureau of Economic Research.

Some analysts have suggested that policy makers may need to pay more attention to broad measures of inflation that include food and energy, given the recent persistence of gains in these prices.

However, Bernanke appeared to firmly endorse the Fed’s long-standing practice of focusing more heavily on core price measures in setting monetary policy.

‘‘Inflation is less responsive than it used to be to changes in oil prices and other supply shocks,’’ he said.

At the same time, Bernanke said the Fed, when forecasting inflation, must acknowledge any possible effects of jumps in food and energy costs on other price rises.

‘‘Forecasts of core inflation must take into account the extent to which food and energy costs are passed through to other prices,’’ he said.
(Reuters)