Higher inflation will force consumers to limit their spending so much that the economy will plunge into recession by July-September, former Federal Reserve Chairman Lawrence Lindsey said in a statement. 

Inflation is undermining the purchasing power of consumers and they will have to cut spending, he said.

The former Fed governor also said the US central bank is far from controlling inflation.

According to him, he is concerned that inflation could rise above 1%. Consumer inflation has not risen by 1% or more for two consecutive months since the summer of 1980.

This will reduce consumer purchasing power by about 2 points on top of the 2.5 points it has already fallen since the beginning of 2021. There can't be such a big shock without a recession, he said.

Lindsey, who served as head of the Fed from 1991 to 1997, is the chief executive of The Lindsey Group, a Washington-based economic consulting firm.

Purchasing power is an estimate of wage growth adjusted for inflation. The Labor Department estimates that inflation-adjusted profits fell 2.6% in 12 months.