The annual inflation rate in the US has hit a 40 year high of 7.9% through February 2022. Do we expect inflation to stay at this level long term? It comes down to the components that make up the current inflation rate.

On the chart above, we have the inflation components broken down to two groups: transitory and sticky. The transitory inflation components: energy, new/used car sales and food at home (groceries) are expected to ease later this year as supply chain issues are expected to fade. The sticky components: shelter, restaurant/hotel/transportation and other (household apparel, furnishings and medical care services) are expected to stick around.

As you consider making purchases, be aware of these inflation components and plan accordingly. Considering a big purchase? Reach out to schedule your free planning consultation.

Source: JP Morgan Asset Management