Inflation News: Potential for Positive Changes Ahead
The recent inflation news has been disappointing for those hoping to see a decrease in the Effective Federal Fund Rate (EFFR). However, according to a Marcus & Millichap brief, there are some positive developments worth noting.
Firstly, April saw the headline and core consumer price indices at 3.4% and 3.6%, respectively. These lower readings indicate that the Fed is making progress in reducing pricing pressures.
Additionally, when housing expenses are excluded from the core CPI measure, inflation drops to 2.1% over the past year. This could potentially pave way for at least one rate cut in late-2024 as May’s core PCE measure is expected to ease and other key CPI readings show signs of disinflation.
The brief also touches on other real estate issues such as:
– Slowing rental rates: The CPI measure for rent inflation dropped to its lowest level since May 2022 at just 5.5%. This reflects similar trends observed in market apartment effective rents with new leases offering more concessions.
– Increase in recurring payments: Costs of vehicle insurance, electricity and medical care have risen significantly over nine months causing consumers to reduce their discretionary spending by up to four percent.
– Decline in new vehicle prices: The first decline after nearly four years was recorded with an increase lending rates contributing towards flatter sales figures while stock surpluses may impact US manufacturing production leading demand softening.
– Rise of eating out costs: Food-away-from-home index increased by four percent compared grocery segment’s pace which means consumers are cutting back on discretionary spending due higher wages pushing restaurant prices up resulting into people opting more groceries instead thus motivating grocers like Aldi,Sprouts,Farmers Market,and Trader Joe’s who will occupy about million square feet nationally this year tightening vacancy rate under three percent reported March .
Overall,the outlook seems promising despite current challenges in the market.
