April Rebound for CPI

The Bureau of Labor Statistics (BLS) reported that the Consumer Price Index (CPI) rose in April.

The CPI rose at a seasonally adjusted annual rate of 2.0% in April, after the 3.4% decline in March. Excluding the volatile food and energy components, “core” CPI increased at a seasonally adjusted annual rate of 0.9%, following the 1.5% decrease in March.

The price index for a broad set of energy sources increased at a seasonally adjusted annual rate of 14.6%, after the sharp decline in March. The index for food and beverages rose at a seasonally adjusted annual rate of 2.5% in April, after the 4.1% increase in March. Increases in energy prices and the index for food and beverages contributed to the increase in overall prices.

Despite decreases in indexes for medical care, apparel, new vehicles, recreation and communication, increases in other indexes, like the shelter index and the tobacco index, pushed core inflation back to positive.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

After declines during the recession, inflation in real rents accelerated from 2012 to 2014, a period of strong recovery in the multifamily sector, reaching a peak average annual rate of 1.7% in 2014. In 2015, real rent inflation slowed down slightly, averaging 1.6%. In April of 2017, the real rent index rose at a seasonally adjusted annual rate of 2.8%, slower than the 4.9% increase in March.



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