US Inflation is 8.5% on a year over year basis at the moment: there has been a little slowdown in recent weeks, so we can say it's cooling somehow.
We have to consider that CPI (consumer price index) includes, other than food, energy, etc., also the housing component: so shelter is a major driver of prices.
In fact, 1/3 of CPI is constituted by shelter and this comprises rent of primary residence, lodging in different places from home (hotels, motels, etc.) as well as owner's equivalent rent of residences: this last point is critical in the prices dynamics, because it represents the majority of shelter in CPI and has to do with (temporary) no renting structures and the "simple" ownership's value calculation, which "updates" more slowly.
To recap, we can divide the shelter costs into two typologies, so that we can analyze the different time trends:
- all items of the cost of housing (less owners' equivalent rent of residences), which have increased from April 2020;
- the single item of owners' equivalent rent of residences, which began to increase in April 2021.
So there is a one year difference: this is because housing market takes time to show its effects into the inflation statistics. Home prices began rising in 2020, but it always takes time for homeowners to close the deals, get into their homes and buy all the things they need in the house (given also the supply chain slowdowns of the recent periods).
So shelter component of CPI should continue to run this way even if other prices categories fall.
Source: YahooFinance
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