TPLC - Chart Of The Moment: Renting Out Inflation
2023-11-23 01:15:00 ET
Summary
- The most recent U.S. Consumer Price Index (CPI) data for October came in lower than economists’ expectations and showed declines across most categories.
- With inflation still above the Fed’s 2% target, concerns continue to linger over whether inflation has fallen far and fast enough or if pockets of price stickiness remain.
- One area that is difficult to handicap is the housing market, where home prices are still out of reach for many Americans.
The most recent U.S. Consumer Price Index ((CPI)) data for October came in lower than economists’ expectations and showed declines across most categories.
However, with inflation still above the Federal Reserve’s (Fed’s) 2% target, concerns continue to linger over whether inflation has fallen far and fast enough or if pockets of price stickiness remain.
One area that is difficult to handicap is the housing market, where home prices are still out of reach for many Americans. Furthermore, the sector is a notorious lagging indicator; replacing it with a proxy may offer a more accurate view of current inflation relative to the Fed’s target.
For example, as this chart shows, if CPI is adjusted to include current rental prices in place of shelter, inflation may already be below target. Obtaining an accurate read on inflation is critical to gauge whether the Fed has tightened enough - or too much.
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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Chart Of The Moment: Renting Out Inflation