February 2024 CPI Inflation Commentary

February 2024 CPI Inflation Commentary

February's inflation data indicates how sticky inflation is and how the fight to control inflation could take longer. This data almost assures that the Fed will not cut rates at its March 20-21 meeting.

February 2024's inflation rate based on the Consumer Price Index came in at 0.4%. Core inflation (CPI index adjusted for food and energy) rose 0.4%, double the desired monthly pace of 0.17% so annual inflation falls to the 2% target.

With inflation frontloaded in the first two months, and assuming that inflation decelerates to 0.3% in March and to 0.2% thereafter, inflation is likely to end at the 3% by December. The demand for services that come with the hustle and bustle during an election year could make inflation harder to control this year.

Given the stickiness of inflation and the potential uptick in an inflation year, the chances of three rate cuts this year are getting slimmer ( I think less than 50% chance).

On the bright side, the Shelter index rose at a slower pace of 0.4% (0.6% in January) or a year-over-year pace of 5.7% based on the unadjusted CPI. The rent growth is in the CPI is slower to reflect the decline in new leases, which Apartment List has estimated at -1% year-over-year in February 2024.

The cost of new vehicles also fell (-0.1%) but the cost of used cars and trucks rose (0.5%), indicating a substitution effect. The demand for last mile distribution services for online delivery and pick up services (e.g. Uber/Lyft) could be driving the demand for used cars. The industrial asset class has been the bright spot in the commercial real estate market, with office vacancy rates still high while multifamily investors are looking at slowing rent growth.

Scholastica (Gay) D. Cororaton, CBE

Chief Economist, MIAMI REALTORS

8 个月

Thanks Tim Tanigawa !

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Suhayl Rouag

Offering a full suite of real estate services to deliver the best outcomes by pairing technology and personalization to exceed client expectations!

8 个月

Now we are starting to get it. Inflation hit the softlanding 9 months ago. You can't beat it with more government spending, shrinkflation, booming stocks, and credit conditions not really tightened and being pumped in the private equity lending market with banks trying to get in the action. The wealth effect of home prices and stocks will continue to drive it just in time for supply and commodity prices that are rising again to hit the holiday inventory buildup in mid summer. Goods inflation will return and will add to the last mile of inflation that we missed the exit for 9 months ago. Government spending will not stop and labor demands for higher pay will continue. We are stuck until something breaks. Debt and credit lending destruction has and always has been the only cure for inflation.

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Jerry Kopensky

REALTOR?, Luxury Lifestyle Property Marketing Adviser at BERKSHIRE HATHAWAY HomeServices Florida Realty ? Star Treatment And VIP Service ? Monthly Real Estate Insight Newsletter - Ask To Receive: [email protected]

8 个月

Great synopsis

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