Inflation: A Look at the Current State and Future Prospects
Recent inflation reports have been a source of frustration for those hoping for a decrease in the Effective Federal Fund Rate (EFFR). However, according to a recent Marcus & Millichap brief, there are some positive developments to note.
In April, both headline and core consumer price indices showed lower readings of 3.4% and 3.6%, respectively. This indicates that the Fed is making progress in reducing pricing pressures.
Another encouraging sign is that when housing expenses are excluded from the core CPI, inflation drops to 2.1% over the past year. Additionally, with easing expected in May’s core PCE measure – another closely watched metric by the Fed – as well as continued disinflation across key CPI readings in upcoming months, it is likely that there will be at least one rate cut before 2024 ends.
The brief also touches on other real estate issues:
– Rental rates have slowed down with rent inflation standing at its lowest level since May 2022.
– Recurring payments such as vehicle insurance and medical care costs have increased significantly causing consumers to adjust their discretionary spending.
– The new vehicle price index has seen its first decline in nearly four years due to higher lending rates and insurance costs.
– On a positive note for manufacturing spaces vacancy rates remain low while demand continues due an expanding economy
and limited speculative pipeline
– Eating out has become more expensive with food-away-from-home prices increasing by four times compared grocery segment prices leading consumers cutting back on discretionary spending but boosting wages which may lead grocers like Aldi,Sprouts,Farmers Market,and Trader Joe’s expand footprints nationally tightening vacancy under three percent reported March
