Why Inflation Is So Stubborn –POLITICO
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POLITICO
One of the biggest obstacles plaguing the Fed’s fight against inflation has been the surprising buoyancy of the $50 trillion housing market, typically one of the most interest-rate-sensitive sectors of the economy.
A historic supply shortage has kept prices high despite rising mortgage rates, and high home prices have put upward pressure on rents. That matters because housing makes up about one-third of the closely watched Consumer Price Index — a key inflation gauge that will help inform the Fed’s decision on when to cut interest rates.
“I think it will be a little calmer,” said Lawrence Yun, chief economist at the National Association of Realtors®. “I think overall the heavy weight, shelter, will continue to decelerate.”
CPI’s shelter gauge typically lags real-time measures in part because leases are renewed annually, so changes in asking rents take a while to cycle into the official data. Falling food or energy prices are easier to track more closely.
“This is fairly unique, the current environment, where the private-sector data is really not matching up with the government data by this large margin,” Yun said.
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This article was originally published by a www.nar.realtor . Read the Original article here. .