Why US small business is still feeling inflation pain

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Over the last three months, core services prices in the US have risen by 6.8 per cent annualised, giving Federal Reserve boss Jerome Powell no room to cut rates.

show motor vehicle repair prices in the US jumped 23.1 per cent in the 12 months to January – the highest ever annual increase since records were kept. They were up 2.7 per cent in January alone.

Bank of America’s US economist Michael Gapen said the latest inflation figures in the services sector, which incudes mechanics, was a significant contributor to the surprisingly sticky overall“Over the last three months, core services prices have risen by 6.8 per cent annualised, well above the pre-pandemic pace,” Gapen said.

Most of the increase was due to rental inflation, which increased by 0.7 per cent in the month and has a large weighting. But transportation services rose 0.9 per cent in the month, and education and communication were also up 0.5 per cent and recreation services up 0.7 per cent.“I lease a 2020 Lexus for $US563 per month, but a lady who has the same car told me that she was now paying $1000 per month.”“It’s just supply and demand.

 

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