display: contents isn't yet shipped by Chrome. The supplied test case passes on my Canary (60.0.3087.0) and Stable (57.0.2987.133). Could you provide more information about your environment (e.g. are experimental features enabled)? 

It's possible that the breaking change was introduced between 60.0.3087.0 and 60.0.3088.0 - I'm leaving this untriaged so that somebody can look once their Canary has ticked past that version.

Ah, yes, you need to enable web platform features to reproduce. This issue should block  issue 657748  to make sure this is fixed before shipping display:contents

Thank you for providing more feedback. Adding requester "shans@chromium.org" to the cc list and removing "Needs-Feedback" label.

For more details visit https://www.chromium.org/issue-tracking/autotriage - Your friendly Sheriffbot

Yes, this is basically the same as  issue 706316 , just applied to first-letter instead.

I'd wait to see what are the resolutions to the multiple spec issues regarding this and others underspecifications related with display: contents:

https://github.com/w3c/csswg-drafts/issues?q=is%3Aissue+is%3Aopen+label%3Acss-display-3

Thanks for putting it in the tracker though :)

Thanks for the extra info!

The following revision refers to this bug:
  https://chromium.googlesource.com/chromium/src.git/+/acb3d3a0246a5c96b7ea2dc9b0ad6239bfef2775

commit acb3d3a0246a5c96b7ea2dc9b0ad6239bfef2775
Author: Rune Lillesveen <futhark@chromium.org>
Date: Thu Nov 30 00:20:59 2017

Test that ::first-letter inherits from display:contents.

Bug:  717460 
Change-Id: I3cb9ddc2eb70f64244669853fb9f3fc5b6b06a26
Reviewed-on: https://chromium-review.googlesource.com/798270
Reviewed-by: Darren Shen <shend@chromium.org>
Commit-Queue: Rune Lillesveen <futhark@chromium.org>
Cr-Commit-Position: refs/heads/master@{#520327}
[modify] https://crrev.com/acb3d3a0246a5c96b7ea2dc9b0ad6239bfef2775/third_party/WebKit/LayoutTests/TestExpectations
[add] https://crrev.com/acb3d3a0246a5c96b7ea2dc9b0ad6239bfef2775/third_party/WebKit/LayoutTests/external/wpt/css/css-display/display-contents-first-letter-002.html

The following revision refers to this bug:
  https://chromium.googlesource.com/chromium/src.git/+/fc5c3629044888b8d723cc11424879bb883d8d3e

commit fc5c3629044888b8d723cc11424879bb883d8d3e
Author: Rune Lillesveen <futhark@chromium.org>
Date: Tue Dec 05 12:13:10 2017

Wrap text child of display:contents in anonymous if necessary.

A text node gets its style from its flat tree parent. The problem is
that our layout code expects the LayoutObject parent to have the same
inherited styles as the text node. That is not the case if a text node
has display:contents ancestors and the display:contents parent does not
have the same inherited styles as the closest ancestor generating a box.

Example:

  <div>
    <div style="display:contents;font-size:50px">Text</div>
  </div>

We're solving this by inserting an anonymous inline between the
LayoutText and its parent LayoutObject. We do not try to merge inline
wrappers for subsequent text nodes, so for:

  <div style="display:contents:color:pink">A<!-- -->B</div>

we create one wrapper for each of A and B, even though one would
suffice.

We attach and detach these wrappers on-demand, so if, for instance, the
inherited computed styles of the display:contents change so that it
matches the computed styles of the LayoutObject parent, we detach the
wrapper as it's no longer needed.

We also currently detach the wrapper when the computed style of the
display:contents and hence the computed style of the wrapper changes. We
could have optimized this through more checking and SetStyle on the
anonymous wrapper.

Bug:  717460 ,  706316 ,  709808 ,  713019 
Change-Id: Ia53b9fe2c0a6067c4600dab49cdf43f23b95b8fa
Tests: see removed lines from TestExpectations.
Reviewed-on: https://chromium-review.googlesource.com/806158
Commit-Queue: Rune Lillesveen <futhark@chromium.org>
Reviewed-by: Robert Hogan <robhogan@gmail.com>
Reviewed-by: Morten Stenshorne <mstensho@chromium.org>
Cr-Commit-Position: refs/heads/master@{#521673}
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/LayoutTests/TestExpectations
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/dom/LayoutTreeBuilder.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/dom/LayoutTreeBuilder.h
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/dom/Text.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/layout/LayoutBlock.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/layout/LayoutInline.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/layout/LayoutObjectTest.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/style/ComputedStyle.cpp
[modify] https://crrev.com/fc5c3629044888b8d723cc11424879bb883d8d3e/third_party/WebKit/Source/core/style/ComputedStyle.h