{"id":8207,"date":"2023-05-13T11:17:41","date_gmt":"2023-05-13T15:17:41","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/high-rents-are-still-fueling-inflation-but-is-the-worst-over-for-tenants\/"},"modified":"2023-05-13T11:17:42","modified_gmt":"2023-05-13T15:17:42","slug":"high-rents-are-still-fueling-inflation-but-is-the-worst-over-for-tenants","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=8207","title":{"rendered":"High rents are still fueling inflation \u2014 but is the worst over for tenants?"},"content":{"rendered":"
\n

Consumer-price increases in the U.S. may be cooling, but rising housing costs are still fueling lingering inflation.<\/p>\n

Consumer inflation was up 4.9% in April from the same month last year, the Labor Department said Wednesday \u2014\u00a0down significantly from the eye-watering 9.1% annual inflation rate notched in June 2022. On a monthly basis, meanwhile, consumer prices rose 0.4% between March and April.<\/p>\n

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Still, even as the cost of energy services, airline fares, and even certain food items like dairy products declined that month, shelter prices were up 0.4%, making that category the \u201clargest contributor to the monthly all-items increase\u201d after the smaller 0.1% monthly gain in consumer prices recorded in March, according to the Labor Department. Higher prices for used cars and gasoline also contributed.<\/p>\n

Overall, housing costs were 8.1% higher in April compared to a year earlier, with rental prices specifically up 8.8%, according to the Labor Department.\u00a0<\/p>\n

But it\u2019s not all bad news for tenants. Despite housing inflation holding firm, \u201cit seems to have downshifted in the last few months,\u201d Jefferies economist Thomas Simons said in a note Wednesday.<\/p>\n

And though the 0.4% monthly increase in core inflation is \u201cstill running far too hot for the Federal Reserve to relax\u201d entirely after a series of rate hikes, \u201cthere are some signs that service sector price pressures are moderating so a June Fed pause [looks] likely,\u201d James Knightley, the chief international economist on U.S. inflation at ING, said in a note Wednesday. \u201cWith corporate pricing power flagging and shelter costs topping out, we could see core CPI in the 2-3% range by year-end.\u201d\u00a0<\/p>\n

Importantly, the consumer-price-index data on rental prices also tends to lag private-market indexes. Jeff Tucker, an economist at Zillow, which has its own Zillow Observed Rent Index (ZORI), said in November that since the company had seen rental prices drop from last February\u2019s peak, February 2023 would potentially mark a \u201cturning point\u201d in CPI rent inflation, while a deceleration might be visible in March.\u00a0<\/p>\n

In a separate report last week, Tucker said the annual growth rate for asking rents nationwide had hit 5.3% in April, down nearly 12 percentage points from the rate of 16.9% in February 2022. The company\u2019s earlier prediction, he wrote, had arguably \u201cnearly come to pass.\u201d<\/p>\n

\u201cThe annual growth rate of CPI-Rent was 8.8% in March, unchanged (after rounding) from the 8.8% annual growth rate in February,\u201d Tucker said. \u201cThe flatlining annual growth rate arrived thanks to a sudden plunge in the monthly growth rate, which fell to a compounded annual growth rate of 5.6%, far below its pandemic-era peak of 11.1% in September of 2022.\u201d<\/p>\n

Even if that rate \u201cbounces around\u201d near 8.8% for a few months, \u201cthe data this spring seems to confirm that we are somewhere near the summit for official annual CPI rent inflation, and the deceleration of asking rents measured by private-sector indices like ZORI should eventually flow through into the CPI,\u201d he added.<\/p>\n

Tucker said in a tweet Wednesday that based on the Labor Department\u2019s most recent consumer-price data, \u201cthe peak seems to have arrived for annual rent inflation.\u201d <\/p>\n

On the other hand, Meagan Schoenberger, a senior economist at KPMG Economics, said in a note Wednesday that \u201cshelter costs may not moderate as rapidly as hoped.\u201d<\/p>\n

\u201cRecent research from the Richmond Fed on high-frequency rent data suggests that rent prices may not cool to their pre-pandemic pace until late 2024,\u201d Schoenberger said. \u201cUnderlying detail reveals that the deceleration is concentrated in lodging away from home, such as hotels.\u201d<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Consumer-price increases in the U.S. may be cooling, but rising housing costs are still fueling lingering inflation. Consumer inflation was up 4.9% in April from the same month last year, the Labor Department said Wednesday \u2014\u00a0down significantly from the eye-watering 9.1% annual inflation rate notched in June 2022. On a monthly basis, meanwhile, consumer prices […]<\/p>\n","protected":false},"author":1,"featured_media":8208,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[236],"tags":[83],"class_list":["post-8207","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-news","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nHigh rents are still fueling inflation \u2014 but is the worst over for tenants? | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Consumer-price increases in the U.S. may be cooling, but rising housing costs are still fueling lingering inflation. 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