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With that in mind, strategists at the Newport Beach, California-based firm thinks investors ought to wade into inflation protection.
"While the current pace may not accelerate much in the short term, longer-maturity TIPS are not pricing in much of an inflation risk premium, if at all, and we see them as attractive investments," Mihir P. Worah and Rahul M. Sekasria wrote in a note to clients.
While the Fed relies more on the Personal Consumption Expenditures index, investors focus on the Consumer Price Index. The CPI's most recent reading, for May, showed an increase of 0.4 percent for all items. The so-called core reading, which excludes food and energy, rose 0.3 percent, which was its largest monthly gain since August 2011.
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CPI inflation is running at a 2.1 percent annualized rate, which is the largest annualized increase since October 2012. The CPI food index rose 2.5 percent, which was its biggest jump since June 2012.
Finally, the shelter index—important because housing costs have the highest weighting within the CPI at 32 percent—hit 2.9 percent, its highest level since March 2008.
Taken together, the inflation picture as measured by prices is showing signs that the post-financial crisis deflation environment is coming to an end. Pimco said it expects CPI to reach 2.3 percent by mid-2015, which in itself is not alarming but ahead of what it sees as market expectations.
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"The TIPS market, which just a few months ago was pricing inflation well below 2.0 percent over this period, has largely come around to this view, as seen from the appreciation and current pricing of short-maturity TIPS," the firm's analysis said. "However, longer-maturity TIPS have not reacted as positively and continue to price in U.S. inflation largely at the Fed target...So there is little, if any, long-term inflation risk premium priced into the market."
Pimco runs a TIPS-indexed exchange-traded fund that has seen $32 million of inflows this year, bringing assets of the 1-5 Year U.S. TIPS Fund to $1.33 billion. The ETF has gained about 1 percent year to date.
—By CNBC's Jeff Cox