Inflation Jumps to Highest Level in 13 Years; How Will Fed Respond?

 

     

 

Key Takeaways:

• Headline inflation increased to 5.4% in June, the highest level since the summer of 2008.
• Reopening of service sectors such as air travel, hotels, recreation and entertainment contributed to the rise.
• Labor shortages are putting upward pressure on wages, particularly in the restaurant and hospitality industries.
• Increased demand along with supply-chain bottlenecks and higher shipping costs are impacting goods prices, including construction materials.
• Many of the inflation drivers are likely to be transitory, keeping Fed stance largely accommodative.