Inflation is declining, but health premiums and medical costs are heading higher

WASHINGTON — During the pandemic, health care costs — usually a main driver of U.S. inflation — remained surprisingly stable, rising just about 2% annually even as prices for many goods and services soared more than three or four times that rate.

But signs are emerging that medical inflation is back as demand for non-COVID-19-related health services recovers and health care providers seek to make up for soaring labor costs and losses during the pandemic.

Prices for hospital services, the single biggest component of medical care, accelerated in December and even faster in January, to an annual rate of 5.5%, according to personal consumption expenditures data, the Federal Reserve’s preferred measure of inflation.

“Unfortunately, it’s going to be a problem that is pretty sticky in terms of consuming more and more of consumers’ pocketbook,” said Sunit