Economists' Outlook

Housing stats and analysis from NAR's research experts.

Consumer Price Index

Each day the Research staff takes a look at recently released economic indicators, addressing what these indicators mean for REALTORS® and their clients. Today’s update discusses the consumer price index.

  • Eat more veggies and less meat: at least, that’s the price signal from the latest consumer price index.  Fruit and vegetable prices fell by 2 percent from one year ago, but the prices of meat and fish were up 6 percent while dairy products jumped 8 percent.
  • The overall consumer price index rose 0.4 percent in February and is now higher by 2.9 percent compared to one year ago.  Interestingly, the ‘core’ index (after subtracting away the volatile energy and food prices which decelerated in the latest month), provides some justification to the Federal Reserve that inflation is not a problem.  For consumers, however, who have to eat and drive to work, what matters is not the ‘core’ but overall price changes and the near 3 percent inflation rate is worsening their earnings and purchasing power.  Also food and gas are products that consumers have to purchase constantly a little at a time (not in one chunk during the year) and the rise of these prices will be a daily reminder that something is not quite right about the economy despite the stock market boom and job gains.
  • The apartment rent index continued its upward trend, rising now to 2.5 percent from one year ago.  Given the falling apartment vacancy rate and still rather low levels of new apartment construction activity, further gains in rents are inevitable.
  • Separately, ahead of St. Patrick’s Day, let’s give cheers to what appears to be an Irish economic comeback.  Ireland’s economy and budget situation were one of the worst among Euro-zone countries a few years ago in the aftermath of its housing market bubble and collapse.  The budget deficit situation was even worse than Greece’s.  Unlike Greece, which continues to want free lunch, Ireland chose to make the tough decision to take austerity measures, including massive government spending cuts, some tax increases, and sizable pay cuts to government employee salaries.  Possibly as a result, Ireland is no longer the focus of negative attention the way Greece continues to be.
  • Ireland’s economy oscillated last year with growth in the first half of last year and mild contraction in the second half, but that is much better than the deep recession that Greece is undergoing.  Do not be surprised if the Irish economy within ten years surpasses Britain’s in terms of income per person, as was the case for a few years prior to the recent recession.  Perhaps, at least in honor of the weekend, we should all eat our Irish oatmeal and help out Irish exports in the process.  It should be lighter on the budget as well, according to the consumer price index.

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