Today’s topic is inflation – specifically the Consumer Price Index (CPI). This report is one of the big pieces of information that comes out monthly, and it’s all about inflation. The way it’s measured is based on the month-over-month number (the percentage change from the previous month), then it adds everything up to give us the year-over-year figure.
Of course, we need inflation to come down to help mortgage rates and all of the other rates out there. Hopefully it will bring us in for a soft landing… although I’m not too confident about this part.
Yesterday’s CPI Report
The report came out yesterday, and the headlines are interesting. They are mostly saying that it was hotter than expected. One report even said that inflation is spiking.
I want to put some perspective on this. Keep in mind that we need inflation to come down because it will bring rates down with it. That’s just the way the economy works.
Both headline inflation (factoring in everything) and core inflation (which focuses specifically on food and energy) are looked at in this report. Both headline and core inflation show a continuation of the trend coming down.
The reason everyone is saying that inflation is coming in hot is because the month-over-month number is just a bit higher… up by 1/10th of a percentage point than they anticipated. So, they thought inflation was going to come down more than it actually did.
Anything you are hearing about inflation going back up: that’s not really what is going on. In both inflation categories, the year-over-year numbers came down.
What’s in Store for the Future?
I think there is more of this to come. All of the experts that I follow are saying that we can expect things to gradually come down. But time will tell.
I just wanted to bring this up because the headlines are filled with clickbait. We all like to click on stuff that sparks fear. The good news is that rate of inflation does seem like it is trickling down. Even though grocery store prices still seem high, keep in mind that those prices will only come down if we experience disinflation. Right now, the goal is to slow inflation from where it is and avoid price increases even more in the future.
From a mortgage business perspective and for the buyers who are waiting for rates to come down, these inflation reports are important. If you have questions about financing options right now, feel free to reach out to me anytime.