Consumer Prices Rise, But Real Rental Prices Unchanged

The Consumer Price Index – Urban Consumer (CPI), rose by a month-over-month seasonally adjusted rate of 0.5% in June. Following two months of falling prices, June marks the second consecutive month that consumer prices have risen. Over the past twelve months, consumer prices have risen by a not seasonally adjusted rate of 1.8%. Growth in core CPI, which excludes the more volatile food and energy prices, remained unchanged at 0.2%. Over the year, core CPI has risen by 1.6% on a not seasonally adjusted basis.

The month-over-month acceleration in overall consumer prices partly reflects a faster pace of monthly growth in energy prices. According to the BLS, energy prices rose by 3.4% on a monthly basis in June after growing by 0.4% in May. Over the past 12 months, energy prices have risen by 3.2%. Prices of energy commodities rose by 5.7% on a monthly basis in June as gasoline increased by 6.3%. However, over the past twelve months, prices of energy commodities have risen by only 2.6%.

Energy services rose by 0.1% on a monthly basis in June as the 0.2% increase in electricity prices was offset by a 0.4% decline in prices of utility gas. Over the past year, energy services prices have risen by 4.0% as utility gas prices have grown by 11.7% over this time period.

Food prices rose by 0.2% on a seasonally adjusted monthly basis in June reversing the 0.1% month-over-month decline that took place in May. Over the past twelve months food prices have risen by 1.4%.

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Rental prices also rose over the month of June, but the growth rate in rental prices was similar to the change in the core-CPI.  As a result, month-over-month, real rental prices were virtually unchanged. Over the past twelve months, real rental prices have risen by 1.2%

NAHB constructs a real rent price index by deflating the price index for rent by the index measuring core inflation. This measure indicates whether inflation in rents is faster or slower than general inflation and provides some insight into the supply and demand conditions for rental housing, after controlling for overall inflation. When rents are rising faster (or slower) than general inflation the real rent index rises (declines).

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