The Bureau of Labor Statistics (BLS) released the Consumer Price Index (CPI) for June. In June, overall inflation was the same as in May, while core inflation declined.

The Consumer Price Index (CPI) rose at a seasonally adjusted annual rate of 2.6% in June, equal to the annual rate in May. Excluding the volatile food and energy components, “core” CPI rose at a seasonally adjusted annual rate of 2.1%, slowing from 2.5% in May. The price index for a broad set of energy sources rose at an annual rate of 17.1% in June, slightly higher than the 16.0% rate in May.

Headline inflation has been heavily influenced by energy prices since mid-2014. In the previous two months, the acceleration and deceleration in energy prices accounted for most of the changes in headline inflation. In June, the moderate acceleration in energy prices contributed to the unchanged headline inflation. Excluding the volatile food and energy prices, core inflation decreased slightly in June, partially caused by the decline in the prices of apparel.

A “real” rent index is constructed 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 2016, real rent inflation was averaging 1.5% for the first half of the year.

Tags: core cpi, core inflation, cpi, energy prices, headline inflation, multifamily, real rent index