Federal Reserve officials are underestimating inflation and risking the US plunging into another recession, Allianz chief economic advisor Mohamed El-Erian told CNBC on Monday.

Central bank rulers insist that the recent price pressures will ease once the short-term supply chain bottlenecks are resolved and the 2020 economic standstill is no longer part of the year-on-year comparison.

But El-Erian said he was seeing increasing evidence that the Fed was wrong.

“I have concerns about the inflation history,” he told CNBC’s Becky Quick during a “Squawk Box” interview. “Every day I see evidence that inflation is not temporary and I have concerns that the Fed is falling behind and may have to catch up.”

If the central bank gets into this position, it may have to raise interest rates and tighten monetary policy in other ways than it wants.

“Usually we end up in a recession because you have to hit the brakes instead of slowly taking your foot off the gas, which is likely to happen,” said El-Erian.

The economy is still technically in a recession that began in February 2020, according to the National Bureau of Economic Research, which is considered the official arbiter on such matters. Real GDP, however, is only a shade lower than it was at the start of the downturn and is likely to exceed that level when the second quarter data comes in.

However, inflation has thwarted recoveries in the past, and recent data tell conflicting stories about the current pace.

The Fed’s most popular measure, the consumer spending index excluding the volatile food and energy sectors, rose 3.4% yoy in May, the highest level since 1992 and well above the central bank’s target of 2%.

It did so after a 5% rise in the consumer price index and a 6.6% rise in the producer price index, both far higher than anything the US has seen since at least the financial crisis.

But much of the price pressure has come from areas that are particularly important to economic recovery – used car prices, airfares, hotel prices, and the like.

As Fed officials see these factors wear off in the coming months, El-Erian said he wasn’t so sure, even if financial markets don’t seem to care.

“If you were to actually look at the inflation numbers, you would have serious doubts about how temporary inflation is,” said El-Erian. “But as long as the Fed thinks it’s temporary, that’s important for the markets.”

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