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re: Cpi

Posted on 1/11/24 at 12:45 pm to
Posted by Bard
Definitely NOT an admin
Member since Oct 2008
51902 posts
Posted on 1/11/24 at 12:45 pm to
quote:

Hotter than expected. Owner’s rent equivalent up, so CPI hasn’t picked up decline in housing. Several areas that had been on the decline reversed with these numbers. Annual core was down, though.


The primary driver keeping inflation sticky (read: very slowly moving downward instead of increasing) is the continuing sustained drop in energy prices. Core removes the Energy category from the CPI equation but that doesn't negate the impact of energy prices on creating/transporting goods. This is a good example of why I've never been a big fan of relying on Core.

I'm not a fan of OER either, but I think in this instance it's likely not too far off the mark as latent demand for housing is still strong. Many buyers never really left the game, they've just been standing on the sidelines waiting for their chance to jump back in. The more rates drop, the more potential buyers get back into the game (with the idea of refi'ing once "rates get back to normal"). That's just not a scenario which can lead to big drops in housing prices.
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