The 0.6% gain in medical care services prices may also have reflected Omicron disruption, and prescription drug prices also saw an unusually large gain. But the acceleration in rent of shelter inflation shows no sign of abating, with owners’ equivalent rent up by 0.4% m/m again and rent of primary residence seeing an even bigger 0.5% gain.
Alongside the 0.7% jump in food away from home prices, this underlines our view that a rapid cyclical acceleration in inflation is underway and, with labour market conditions exceptionally tight, it is unlikely to abate any time soon.
While we still expect more favourable base effects and a partial easing of supply shortages to push core inflation lower this year, this suggests it will remain well above the Fed’s target for some time.
Read More: US inflation hits 40-year high of 7.5%; Eurozone growth forecast cut –