Rising health costs could make it harder for the Fed to get inflation down to 2%

Morningstar September 17, 2023
Provided by Dow Jones, By Jeffry Bartash

U.S. inflation has slowed sharply from a 40-year peak of 9.1% and it’s gotten an assist from a surprising source: Falling medical costs. But that’s about to end.

The rate of U.S. inflation has slowed considerably from a 40-year peak of 9.1% in mid-2022 and it’s gotten an assist from a surprising source: falling medical costs.

But that’s about to end — to a large degree because of the complex way the federal government tries to figure the rise of medical costs. And a re-acceleration in health-care costs could complicate the Federal Reserve’s job to get inflation back down to pre-pandemic levels of 2% or less.

“Unfortunately, the bill is about to become due” said economist Omair Sharif, founder of...

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