Will a Cooler Labor Market Slow Supercore Inflation?
Abstract: Inflation has declined substantially since its peak in June 2022. This largely reflects lower energy prices and more moderate price increases for core goods, as global supply chain constraints have eased and consumers have resumed more normal spending patterns, shifting back from goods toward services. In contrast, inflation for core services continues to rise, in part due to lingering pandemic-related increases in shelter prices that are still affecting official inflation statistics (Lansing, Oliveira, and Shapiro 2022). However, because new rents are rising more slowly, policymakers expect the housing sector to contribute less to core services inflation over the next two years.
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Provider: Federal Reserve Bank of San Francisco
Part of Series: FRBSF Economic Letter
Publication Date: 2023-07-12