Inside US inflation

BofA talks us through it:

Rents surge pointing to stronger persistent inflationCore CPI rose 0.24% mom in September, bouncing back from the 0.1%rise in August. This kept the % yoy rate steady at 4.0% (4.03% unrounded) yoy. Headline inflation rose0.41% mom, which bumped up % yoy to 5.4% from 5.3%. Energy prices soared 1.3%mom and food spiked to 0.9% mom.

A major development in this report was a notable acceleration in OER to 0.43% mom and rent of primary residence to 0.45% from its prior 0.2-0.3% mom trend. Given strength in the high frequency rent data, we believed it was only a matter of time before the CPI rent components broke out higher. While one month does not make a trend, this is an early signal of stronger persistent inflation pressures materializing, ultimately supporting continued above-target inflation over the medium term. Medical care was anunderwhelming-0.1% mom as health insurance remained a drag of-1.0% mom—this indicates the BLS did not begin to incorporate the 2020 data just yet, but instead delayed it to October. Outside of health insurance, hospitals cooled to a 0.1% clip and professional services declined by-0.2% mom.

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