Housing Costs ‘Main Factor’ Driving Inflation, Even as Rates Cool: Report
By Isabelle Durso September 11, 2024 12:29 pm
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Inflation rates in the U.S. may be cooling down overall, but housing costs are still heating up, according to the latest Consumer Price Index (CPI) report released Wednesday morning.
The CPI rose 0.2 percent in August — the same as it did in July, the U.S. Bureau of Labor Statistics said. Overall, consumer prices grew 2.5 percent over the last 12 months. That’s down from the 2.9 percent annual inflation rate the CPI reached last month, and it marked the fifth consecutive annual drop and the smallest yearly increase since February 2021, The Associated Press reported.
A spokesperson for the Bureau of Labor Statistics did not immediately respond to a request for comment.
While inflation does seem to be trending in the right direction, housing costs are still weighing it down. The shelter index within the CPI was up 0.5 percent in August and was “the main factor in the all items increase,” according to the report. The index for rent also rose 0.4 percent over the month and home ownership increased 0.5 percent.
“The pressure from housing on overall inflation has been ongoing and is clearly related to the very tight housing market and the decade-in-the-making shortage of affordable housing,” the White House said in an analysis of the CPI report.
Not to mention, the so-called “core inflation” rate — which excludes food and energy costs — rose 0.3 percent in August after rising 0.2 percent in July, representing an overall increase of 3.2 percent from the same time a year ago, the White House said. That includes shelter, airline tickets, car insurance, education and apparel, and was that measure’s highest increase in four months, Bloomberg reported.
In the greater New York area, higher prices for shelter — 0.6 percent — contributed to the overall 0.3 percent rise in consumer prices in August, the same increase as in July, according to data from the Labor Department. The overall growth was also driven by higher apparel prices, which jumped 5.1 percent.
Meanwhile, food prices remained unchanged in August for the New York-Newark-Jersey City area, while energy prices decreased 3.7 percent and gasoline prices fell 3.2 percent over the month, the data showed.
Over the past year, the New York area’s CPI increased by 3.7 percent, with prices for all goods excluding food and energy rising 4.4 percent, according to the Labor Department.
The new data comes as the Federal Reserve moves closer to its 2 percent inflation target and shifts its focus to begin cutting interest rates next week, The Associated Press reported.
Isabelle Durso can be reached at idurso@commercialobserver.com.
