The cost of housing surged in July, accounting for nearly 90% of total inflation, according to the latest Bureau of Labor Statistics Consumer Price Index (CPI) data released Wednesday.
Shelter costs rose 5.1% year-over-year and 0.4% month-over-month, after rising 0.2% in June, the BLS showed. The 0.4% monthly increase was greater than Bank of America economists’ expectations of 0.3%, according to investment research firm Morningstar.
“The most disappointing aspect of this report was the shelter data,” Omair Sharif, founder of the research firm Inflation Insights, wrote in a note after the report, according to Yahoo Finance.
‘Disappointment’ came from shelter which contributed 90% of the July increase. OER up 0.36% after 0.27% in June. Still low compared to ’22-23 but moving in the wrong direction. I suspect rising insurance and taxes are the culprits here, albeit indirect. https://t.co/rgjOEW6FB6
— Benjamin M. Lavine (@benjaminMlavine) August 14, 2024
The July increase in shelter costs was comprised of a 0.5% increase in rent, a 0.4% increase in owners’ equivalent rent and a 0.2% increase in lodging away from home, BLS data showed.
Rents are typically fixed for the duration of a lease, creating a lag between new lease prices and rental inflation data. As a result, despite cooling prices for new leases, overall housing inflation is expected to remain above pre-pandemic levels through the end of 2025, according to the Federal Reserve Bank of Minneapolis.
“Rents are up 22.3% since Jan ’21, but this metric suffers from large lags and will continue marching higher in the months ahead as it incorporates today’s price changes,” E.J. Antoni, a research fellow at the Heritage Foundation’s Grover M. Hermann Center for the Federal Budget, wrote on X, formerly Twitter.
Rental and owners’ equivalent rent costs have both increased nearly 24% since the start of the COVID-19 pandemic in March 2020, according to the Federal Reserve Bank of St. Louis (FRED). Cumulative inflation, meanwhile, is somewhat lower at 22%.
Inflation measured 2.9% year-over-year in July, the first time the headline number has fallen below 3% in over two years.
(Featured image credit: Screen Capture/CSPAN)
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