NAA Inflation Tracker: July 2024

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Key Takeaways

  • For monthly increases in shelter costs, we have to go back three years to find a level lower than this month’s reading: 0.25% for rent and 0.28% for owners’ equivalent rent. 
  • Consumers polled in the Fed’s survey are showing some optimism, expecting price increases to decelerate across the board, for all goods and services, over the next 12 months.
  • Wages in the financial activities sector, including the real estate industry, are still rising by more than five percent year-over-year. 

CPI, Latest Release, June 2024  

Inflation measures for June surprised to the upside, with headline CPI up 3.0% and core CPI up 3.3% year-over-year. Headline CPI was down 0.1% over the month, while core rose 0.1%, below analysts’ expectations. CPI last experienced a decrease in May 2020 while core CPI’s monthly increase is the lowest since January 2021. Airline fares dropped by 5.0% in June, followed by gasoline prices (-3.8%) and used cars and trucks (-1.5%). Prices increased for utility gas service (2.4%), car insurance (0.9%) and dairy products (0.6%).  

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consumer price index as of june 2024

CPI for Housing, June 2024 

The CPI includes two measures for shelter costs: owners’ equivalent rent (OER) and rent of primary residence, both of which are self-reported. Together, they comprise about one-third of CPI. Rent has decelerated for 15 consecutive months, up 5.1% year-over-year, while OER, also decelerating, increased 5.4%. For monthly increases in shelter costs, we have to go back three years to find a level lower than this month’s reading: 0.25% for rent and 0.28% for OER.

Private sector data providers are mostly aligned with monthly rent increases ranging from 0.2% to 0.4% while year-over-year changes range from 0.6% increases (Yardi) to declines of 0.7% (ApartmentList). 

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cpi shelter costs as of june 2024

Super Core Inflation, June 2024 

Due mainly to lags in CPI shelter data, the Fed has begun to focus more on “super core” inflation, that is, prices excluding food, energy and shelter. Super core inflation measured 1.8% year-over-year, its lowest level since March 2021. Once again, airline fares and used cars and trucks led the price declines. Super core CPI has flatlined for the past two months with no changes in prices, on average, since April.   

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cpi less food, shelter, and energy as of june 2024

Inflation Expectations, June 2024 

The Fed tracks 21 different measures of inflation expectations. The data presented in the chart below are inflation expectations one year from now from the Federal Reserve Bank of New York’s Survey of Consumer Expectations and the University of Michigan’s Consumer Sentiment Index. Both measures decreased from the prior month, settling in at 3.0%, still above pre-pandemic 5-year averages. Consumers polled in the Fed’s survey are showing some optimism, expecting price increases to decelerate across the board, for all goods and services, over the next 12 months. 

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inflation expectations one year from now (as of june 2024)

Wage Growth, June 2024

Wage growth, as measured by average hourly earnings, increased 3.9% year-over-year, its lowest rate since May 2021. On a month-over-month basis, wages remained sticky, up 0.3%. matching the average monthly increases in 2023. Wages in the financial activities sector, including the real estate industry, are still rising by more than five percent year-over-year. 

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wage growth as of june 2024

What to Watch in the Next Month 

The Fed’s next policy meeting is July 30 – July 31, and then not again until September 17- 18.  Chair Powell was quoted this week saying that the labor market appears to be fully back in balance and has acknowledged in the past that it can turn very quickly. July’s Employment Situation Report, showing more concentrated job growth and another uptick in the unemployment report, along with today’s inflation report, bring the Fed ever closer to a rate cut.

 

 

Next Tracker: August 14, 2024