Well, yet again the numbers disappointed. If I had to pick one piece of data for what it might signal, I’d take a look at this (via the Wall Street Journal):
While goods have been the most eye-popping aspect of inflation, the recent rise in services prices—what people pay for everything from medical care to haircuts to restaurant meals to housing—might say more about inflation’s persistence. Excluding energy services, they were up 4.1% from a year earlier in January, which was the biggest gain since 1992. That is notable because services inflation is driven less by factors such as the global supply of manufacturing components and more by things like wages. Your haircut doesn’t cost more because it got stuck on a slow boat from China.
Indeed.
The price of services tend to be “stickier” than the prices of goods (for some rather antique research on this topic go here and here), and so this is not an encouraging sign.
It’s also interesting to note that the St. Louis Fed’s Sticky Consumer Price Index has been ticking up. The most recent published data refer to December 2021, when it was running at nearly 3.5 percent, the highest since February 2002.
If that’s not enough gloom for you, please check out recent pieces by Edwin Burton and Kevin Hassett on Capital Matters.