June [July] inflation

July inflation 3.2 annually and 0.2 month over month

June [July] inflation

CPI: Consumer prices rose by 3.2% annually in July, picking up for the first time in 13 months | CNN Business







June inflation report likely to show 'war hasn't yet been won' | Fox Business

Economists expect the Consumer Price Index, which measures a range of goods that includes gasoline, health care, groceries and rent, to show that monthly prices rose 0.3% in June, unchanged from the increase recorded the previous month.

On an annual basis, inflation is projected to have climbed 3.1% – down from 4% in May and a marked drop from the peak of 9.1% in June 2022. That remains well above the pre-pandemic average and the Federal Reserve's 2% target rate.



This article spins it as lingering inflation but if you dig into it this is pretty encouraging news. The housing and shelter part of CPI is 33% of cpi.

Through May the CPI component was up 8.7% year over year.

Apartment List National Rent Report

https://res.cloudinary.com/apartmen...052a399dfdbd23cf4fb97ea3/rent_index_v_cpi.png



Let’s assume the June year over year will be roughly the same. 8.7% times .33 =2.9%. So almost all of the predicted June CPI year over year inflation is due to housing.

Now looking at the graph above, the rent index, which tracks new rents, and leads the cpi housing index because cpi is based on current rents - the new rents is flat 0.0% over 12 months. So it is inevitable that CPI housing will follow this trend.

For for CPI excluding housing was almost zero over the past 12 months. And new rents is about zero over the last 12 months.

I agree the fed should be cautious, but I get tired of these narratives of how inflation is still elevated - and people seem surprised by it. The housing inflation has already occurred many months ago. At this point it is just math.

Edit: actual inflation numbers slightly lower

Inflation rose just 0.2% in June, less than expected as consumers get a break from price increases


Inflation fell to its lowest annual rate in more than two years during June, the product both of some deceleration in costs and easy comparisons against a time when price increases were running at a more than 40-year high.

The consumer price index increased 3% from a year ago, which is the lowest level since March 2021. On a monthly basis, the index, which measures a broad swath of prices for goods and services, rose 0.2%.

That compared to Dow Jones estimates for respective increases of 3.1% and 0.3%

 

That’s all fine, but I’m just making the point that the inflation we are seeing now already happened between early 2021 and mid 2022.



By about August 2022, it was no longer happening and is still not happening compared to prior years. For all intents and purposes we have not had much inflation at all over the last 10-12 months.

A year or more ago when some people were predicting a rapid drop in inflation I said no, because that’s the way the inflation numbers worked. That turned out to be the case. Now I am saying that unless there is some sort of price shock, we are almost certainly headed for a period of low inflation. If a recession hits you could see mild deflation.

 

This guy is saying something similar to me

https://archive.is/enz9p



U.S. core inflation—which excludes volatile food and energy—measured using the standard consumer-price index was 2.3 percentage points higher than the European-style inflation, known as the harmonized index of consumer prices. It is the biggest gap there has ever been.
The main reason is that Europe’s measure, known as HICP, doesn’t include the imaginary cost of what a homeowner would pay to rent their house, which makes up about a third of the U.S. core CPI. Known as “owners’ equivalent rent” or imputed rent, the measure has long had its critics.
Exclude something that no one actually pays, and which is calculated from guesses by homeowners of the rental value of their house, and core inflation’s looking basically fine, at a fraction under 3%. I’ve concentrated on core inflation, because food and oil prices swing so much that they make it hard to tell if the economy is generating inflation pressures the central bank needs to tackle.

 

Actual inflation numbers:

Inflation rose just 0.2% in June, less than expected as consumers get a break from price increases


Inflation fell to its lowest annual rate in more than two years during June, the product both of some deceleration in costs and easy comparisons against a time when price increases were running at a more than 40-year high.

The consumer price index increased 3% from a year ago, which is the lowest level since March 2021. On a monthly basis, the index, which measures a broad swath of prices for goods and services, rose 0.2%.

That compared to Dow Jones estimates for respective increases of 3.1% and 0.3%

 

https://www.bls.gov/news.release/pdf/cpi.pdf

CONSUMER PRICE INDEX – JUNE 2023
The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.2 percent in June on a seasonally adjusted basis, after increasing 0.1 percent in May, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.0 percent before seasonal adjustment.
The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase, with the index for motor vehicle insurance also contributing. The food index increased 0.1 percent in June after increasing 0.2 percent the previous month. The index for food at home was unchanged over the month while the index for food away from home rose 0.4 percent in June. The energy index rose 0.6 percent in June as the major energy component indexes were mixed.
The index for all items less food and energy rose 0.2 percent in June, the smallest 1-month increase in that index since August 2021. Indexes which increased in June include shelter, motor vehicle insurance, apparel, recreation, and personal care. The indexes for airline fares, communication, used cars and trucks, and household furnishings and operations were among those that decreased over the month.
The all items index increased 3.0 percent for the 12 months ending June; this was the smallest 12-month increase since the period ending March 2021. The all items less food and energy index rose 4.8 percent over the last 12 months. The energy index decreased 16.7 percent for the 12 months ending June, and the food index increased 5.7 percent over the last year.

 

You have the following forces that may continue to suppress prices:

China's deflation pressure builds as consumer prices falter

China is teetering on actual deflation

Rent vacancy is up

Our vacancy index tightened from 7.2 percent to 4.1 percent in just over a year.

In June, the vacancy rate now sits at 7.2 percent, matching the pandemic peak in July 2020.




and apartment construction is strong

Sun Belt metros lead apartment construction boom in 2023

US at record oil production:

US oil output to rise to record high in July but growth narrowing, EIA says

Natural gas production at record levels with increasing inventories



Natural Gas Weekly Update.

Now what if the economy actually does cool down, and what if the Ukraine war eventually ends?

Lots of items trending to lower inflation.

 

Used vehicle prices drop by a record for the month of June

Seems like there were cycles - there was energy prices, food prices, car prices and housing prices. Each one of the shot up and either leveled off or came back down, except for CPI housing, which is likely to level off or come back down a bit given falling new rents and falling home prices.