To the surprise of Wall Street, but to the surprise of no one here on C99P, yesterday's inflation report showed price inflation at a 40-year high.

Inflation jumped again in June on a persistent climb in gas, food and rent costs, notching another 40-year high and likely solidifying the Federal Reserve’s plans for another big rate hike this month.

Prices increased 9.1% from a year earlier, up from an annual rate of 8.6% the prior month and the largest gain since November 1981, the Labor Department's Consumer Price Index showed Wednesday. Economists surveyed by Bloomberg had estimated inflation would rise to 8.8%.

On a monthly basis, consumer prices increased 1.3%, the largest such leap since 2005, compared with a 1% rise in May.

"Ouch," Ian Shepherdson, chief economist of Pantheon Macroeconomics, wrote in a research note of the latest surge in prices. "But this will be the last big increase."

OK. So they were wrong this time, but they'll get it right next time. Trust us.
Why is Wall Street so committed to predicting an end to inflation? Two reasons.
First reason is because if inflation ends then the Fed will cut interest rates, and that means more easy money on Wall Street. So they are "talking their book."
Second reason is because constantly lower interest rates has been the rule, not the exception, for Wall Street since 1981. No one still working on Wall Street is old enough to remember anything else.

There are some slight indications of declining inflation, but those are all offset by other indications.
One item is that natural gas prices in the U.S. are much lower than in Europe, but for a very temporary reason. A major LNG plant in Texas had an explosion and is currently offline. Thus we can't export natural gas to Europe, creating shortages overseas, but a surplus at home. In a few months the plant will reopen and natural gas prices in the U.S. will spike.

The second item I would like to focus on: Rent.

Rents rose in the US last month at the fastest pace since 1986, helping to propel overall inflation to a fresh four-decade high.
An index measuring rent of a primary residence was 0.8% higher in June than the month before, an acceleration from the 0.6% increase recorded in May, according to the Labor Department’s report on consumer prices published Wednesday. In the 12 months through June, rents were up 5.8%.
...
The Labor Department measure tends to lag behind other estimates, so it is likely that rent increases will contribute to rising inflation in the consumer price index through the rest of this year, according to Mark Zandi, chief economist of Moody’s Analytics.

“The big increase in CPI rents is catch-up with the consistent double-digit growth in market rents,” Zandi said. “The good news is that market rents appear to be topping out, as renters are not able to afford the higher rents and are balking. More rental supply is also coming, although this will take a year or two to have a meaningful impact on market rents.”

There are three big takeaways here.

1) Rent is usually the biggest item of the CPI, and the biggest expense or the working class, so it going up at the fastest pace in 36 years is catastrophic.

2) The article says in plain English that this is lagging indicator and will "contribute to rising inflation..through the rest of the year." Yet Wall Street says inflation is done.

3) Finally, the "good news" is that "renters are not able to afford the higher rents". This a**hole seems to think that's like when a consumer can't afford the new iPhone, so they'll buy an Android instead.
Here's a clue, a**hole: when a renter can't afford the rent it's a gawddamn crisis.

And yet, it's worse than that because the BLS is understating rent inflation.

In its latest consumer price index inflation report, BLS said that annual inflation in shelter costs stood at 5.4% in May, the highest level since 1991. That figure is a weighted average meant to reflect the rate of inflation affecting new and continuing renters and homeowners alike.

But the non-public data behind the topline number show a gulf between the prevailing conditions affecting those who moved residences and those who didn’t . Annual rental costs for new tenants jumped from 4.3% in July 2021 to 11.1% in March 2022. For existing tenants, inflation was lower and grew at a slower pace over that period, climbing from 1.5% to 2.7%. For residents of owner-occupied units, the trend was similar.
...
Beyond masking the extent of inflation faced by new tenants, Sohn said, the agency also distorts the market’s reality with the way it calculates the cost of housing ownership. Almost two-thirds of Americans live in homes they own.

Since 1983, BLS has approximated the rental value of owner-occupied homes by measuring the rent paid by tenants in the same vicinity. This is then translated into a rent equivalent.

“To me, the owner-occupied rent is somewhat a wild guess in the official data,” Sohn said. “If I were to rent my own house to myself right now when the price rise is really high, I would be paying much more than what an apartment rent would charge but the BLS wouldn’t reflect that necessarily.”

So homeowners are mixed in with actual renters and it waters down the reality of the situation.
Into this disastrous housing situation we need to factor in the expiration of the pandemic eviction suspension laws.
It looks really bad.

The RVA Eviction Lab’s 2022 first-quarter report cited data from a U.S. Census Bureau Household Pulse Survey of Virginians not caught up on rent, estimating that renters in about 58% of Virginia households fear eviction in the next two months, up from 28% in the fourth quarter of 2021. Approximately 52% of those surveyed were not caught up on their rent payments, compared to 16% at the end of 2021. Most glaringly, 91% of respondents have no or little confidence in their ability to pay the next month’s rent.
...But these numbers don’t capture lease nonrenewals or notices of eviction when tenants voluntarily leave residences, either due to poor conditions or because they lack the support or willingness to respond within the legal system.

One survey I've found says that around 35% of homeless people are homeless due to high rent.
Eventually the free market will "solve" the problem of rapidly rising rents, but only at a catastrophic cost to society, similar to how a famine will solve high food prices.