Real Residential Rents Remain Flat ….. But The CPI Continues to March Upward

The Consumer Price Index (CPI) continued to march upward in September; the fourteenth rise of the past fifteen months. Rising energy and food indexes were the main cause. The Bureau of Labor Statistics (BLS) reported a 0.3% (SA) increase in the CPI for All Urban Consumers in September, with the 12-month change edging up to 3.9% (NSA).

 

The energy index rose 2.0% (SA) in September, bolstered by a 2.9% increase in gasoline prices. The household energy index (+0.7%) also rose due to gains in the electricity index (+0.7%) and natural gas index (+0.8%). The increase in the gasoline index came as a surprise, since Energy Information Administration (EIA) data indicated a modest decline in the monthly average pump price (from $3.61 to $3.57 per gallon) between August and September. However, the rise stemmed from the seasonal adjustment process, with gasoline prices down 0.7% before seasonal adjustment — consistent with the gasoline pump price data from EIA.

The food index advanced 0.4% (SA), led yet again by increases in dairy products (+1.2%), fresh fruit and vegetables (+0.9%), and cereals and bakery products (+0.9%). The food index has increased 4.7% since September 2010, driven by strong gains in dairy (+10.2%), fresh fruit and vegetables (+6.7%), and cereals and bakery products (+5.6%).

Core CPI, the index for all items less food and energy, increased by 0.1% (SA). While this marks a slowdown from recent months, it still represents a continuation of the steady increases that have persisted since the beginning of the year. Overall, core CPI is up 2.0% since September 2010.

The shelter index recorded its 12th consecutive increase last month, edging up 0.1% (SA). Overall, the shelter index is up 1.7% relative to September 2010. The rate of growth in owners’ equivalent rent and rent of primary residence also moderated in September, as these measures increased 0.1% and 0.2%. In the past year, these subcomponents have risen 1.5% and 2.1%, respectively.

While increasing in nominal terms, the index for rent of primary residences expressed in real terms slipped slightly (-0.1%) in September — the 0.2% rate of increase in the CPI for rent on primary residences, not keeping pace with the 0.3% increase in the CPI for all items. The real rent index has remained relatively flat since April 2011, which follows a period of appreciable declines between December 2010 and April 2011. Overall, the real rent index remains two points lower than it was in September 2010.

 

 



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