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What's Up With Inflation?

Andre at Plotify Insights

The Bureau of Labour Statistics recently released Consumer Price Index (CPI) data. The CPI is a weighted index of goods purchased by consumers. The CPI helps estimate price changes within a basket of goods over time. Inflation for the basket of goods, less food and energy, was 5.5% year-over-year.

There are multiple measures of inflation. For instance, the CPI differs from the Personal Consumption Expenditures (PCE) Price Index, which measures inflation by sourcing prices from businesses, while the CPI sources prices from consumers. Future Plotify Insights will explore the differences between inflation measures.

Among the underlying data from the recent CPI release, shelter pricing increased by 8.1% year-over-year. Shelter pricing includes rents, travel, home ownership, and insurance costs, and is based on rolling 6-month data. As a result of the rolling data, CPI shelter pricing historically lags behind other datasets, like Zillow's.

Overall CPI remains above its 50 year median. However, CPI has declined by 1.1% over the past five months. As inflation eases, consumers have more purchasing power, reducing their chances of defaulting on payments, such as cars or mortgages, while fueling additional economic activity.

The CPI is comprised of many goods. Consumer inflation was stable or declined month-on-month for most goods, except shelter costs.

Source: US Bureau of Labor Statistics

Within the CPI, shelter pricing data helps measure changes to the growth of rental and ownership prices. Future Plotify Insights will decode Fed policy in relation to inflation and how rate-setting affects housing. Stay tuned for more updates.

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