I'm struggling to understand the economists here. They argue that the surge in CPI is isolated to items directly impacted by the economic re-opening and thus is likely temporary. Items like Hotel Rooms, used cars, and airfare are subject to a current demand surge and that the rising prices will normalize. I can get that argument. But then it references items that are more 'sticky' such as "shelter" which makes up 30% of the CPI index which only rose by 0.3% in May and 2.2% for the year. From the article linked:
Shelter accounts for more than 30% of CPI. The shelter index rose 0.3% in May, and 2.2% over the last 12 months. The rent portion rose 0.2%, and the index for owners’ equivalent rent — or the hypothetical amount a homeowner would charge someone to rent their dwelling — rose 0.3%. Lodging away from home rose just 0.4%, after jumping 7.6% in April.
So here's my question/concern. Weren't rents being artificially suppressed by the national moratorium on evictions? If you are a landlord, why raise rents that you can't enforce? Given home and property value increases of over 5% (or even 10%) in most areas, similar rent increases will surely follow, they always have. So it seems to me that the one area of 'supposed' price stability, is likely only 'sticky' because of a policy that's expired (or expiring). If rents increase even half as much in cost as real property has increased in value, then we'll legitimately be looking at a 6-8% inflation measure, which won't look or feel 'temporary'.
Any of you college grads or economy buffs feel like telling me what I'm misperceiving, because two straight months of hefty CPI numbers feels like a bigger issue than its being portrayed as.
Shelter accounts for more than 30% of CPI. The shelter index rose 0.3% in May, and 2.2% over the last 12 months. The rent portion rose 0.2%, and the index for owners’ equivalent rent — or the hypothetical amount a homeowner would charge someone to rent their dwelling — rose 0.3%. Lodging away from home rose just 0.4%, after jumping 7.6% in April.
So here's my question/concern. Weren't rents being artificially suppressed by the national moratorium on evictions? If you are a landlord, why raise rents that you can't enforce? Given home and property value increases of over 5% (or even 10%) in most areas, similar rent increases will surely follow, they always have. So it seems to me that the one area of 'supposed' price stability, is likely only 'sticky' because of a policy that's expired (or expiring). If rents increase even half as much in cost as real property has increased in value, then we'll legitimately be looking at a 6-8% inflation measure, which won't look or feel 'temporary'.
Any of you college grads or economy buffs feel like telling me what I'm misperceiving, because two straight months of hefty CPI numbers feels like a bigger issue than its being portrayed as.
Inflation is hotter than expected, but it looks temporary and likely won't affect Fed policy yet
Consumer prices jumped more than expected in May, but the surge in inflation looks to be temporary and should not push the Fed to tighten policy for now.
www.cnbc.com