Inflation: Is There Hope for Improvement?
Recently, there has been frustrating news regarding inflation and the Effective Federal Fund Rate (EFFR). However, a recent Marcus & Millichap brief offers some positive insights.
According to the brief, April saw a decrease in both headline and core consumer price indices at 3.4% and 3.6%, respectively. This suggests that the Fed is making progress in reducing pricing pressures.
Additionally, excluding housing expenses from the core CPI shows an inflation rate of only 2.1% over the past year. The upcoming release of May’s core PCE measure could also contribute to further disinflation and potentially lead to at least one rate cut by the end of 2024.
The brief also mentions other real estate issues such as slowing rental rates with a CPI measure for rent inflation at its lowest level since May 2022 due to market apartment effective rents slowing down with more concessions being offered on new leases.
Recurring payments have increased significantly in areas such as vehicle insurance, electricity, and medical care causing consumers to adjust their discretionary spending habits resulting in decreased retail spending on non-essential goods by over 4%.
There has also been a decline in new vehicle prices for manufacturing spaces which may soften demand due to stock surpluses while still maintaining low national vacancy rates below four percent with limited speculative pipeline growth expected.
Lastly,the food-away-from-home index has increased by four percent compared to grocery segment’s pace leading consumers towards cutting back on discretionary spending while higher wages are driving up restaurant prices resulting in more people choosing groceries instead which is motivating grocers like Aldi,Sprouts,Farmers Market,and Trader Joe’s who will occupy approximately one million square feet nationally this year tightening vacancy rates even further within this sector currently reporting under three percent nationwide according March data reports provided within said briefing document.
