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Sticker shocks ahead? Sharply rising prices pose worries. Find out why here.
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Sticker shocks ahead? Sharply rising prices pose worries. Find out why here.

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Two months of sharply rising prices have raised concerns that large government financial rescue packages and the Federal Reserve's ultra-low interest rate policies are fueling higher inflation.

Two months of sharply rising prices have raised concerns that record-high government financial aid and the Federal Reserve's ultra-low interest rate policies — when the economy is already surging — have elevated the risk of accelerating inflation.

In May, consumer prices rose 5% from a year earlier, the largest such year-over-year jump since 2008.

Many economists see the recent spike as temporary. Others say they worry that higher consumer prices will persist. Jason Furman, a Harvard professor who was President Barack Obama's top economic adviser, thinks the reality is more complicated. He does, however, lean toward the higher-inflation-will-persist camp.

Furman notes that while most economists expect inflation to slow from its current quickened pace, not all think it will fall back to the Fed's preferred level of 2% a year.

The Associated Press spoke recently with Furman about why higher inflation might prove only temporary, why it might persist and whether a little more inflation is all that bad.

The interview was edited for length and clarity.

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