This is another heavy-hitting US inflation report and frankly the worst in a while.

The stickier components of the basket, including rents and transportation services came in smoking hot, and without substantial deflation in various core goods categories such as cars and apparel, this would have been an outright disastrous report for the Federal Reserve.

While we had the core goods part of the equation right, we had the re-acceleration of core services wrong. The wage component seems to be playing tricks with our inflation-modeling here admittedly.

Chart 1: Decomposed US CPI MoM trends %