The 0.9% surge in core prices last month, the biggest monthly gain since April 1982, was concentrated in sectors that are reopening and/or facing intense supply shortages, which should eventually ease. With the annual rate of core CPI inflation rocketing to 3.0%, the Fed will be feeling the pressure, but we doubt this report will change Fed officials’ view that those pressures are “largely transitory”. It’s just that there’s a lot more “transitory” than they were expecting.
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