As we know, the combination of the pandemic and a recovery that was faster and stronger than anticipated led to widespread labor shortages. Businesses responded to the shortages by increasing wages, raising prices, and persuading consumers to live with a lower level of service. As a result, profits are at a very high level in spite of the turbulence, and inflation has become a serious issue.
By now, both businesses and consumers have had time to adjust to the new normal. Barring some new and horrible variant of the virus, the workforce isn’t going to shrink again. That means wage increases are going to slow, which in turn means inflation should continue to decline in the absence of new shocks with commodity prices.