Mortgage Blog

CPI Starting to Ease

November 10, 2022 | Posted by: Jeremy Wilhelm

The October Consumer Price Index (CPI) report showed that overall inflation increased by .4%, which was .2% below expectations.  Year over year, inflation declined from 8.2% to 7.7%, much cooler than the 8% that was originally forecasted.

The real story here is the Core Rate, which strips out food and energy prices.  It increased by .3%, which was softer than the .5% anticipated.  As a result, year-over-year core inflation decreased from 6.6% to 6.3%, which was also much lower than the 6.5% expected.

Shelter rose by .8%, making it the largest monthly increase in the history of the index, and is up 6.9% year over year.  Rents rose .7% last month and are now up 7.7% year over year, which is up from 7.2%.

With the CPI rental costs still catching up, real rental costs have started to come off their peak and slightly decline. Because shelter makes up 39% of Core CPI, it was the main cause of the .3% monthly gain….but imagine when this catches up to what is the softening happening in the real shelter market.  

Initial Jobless claims, which measure individuals filing for unemployment benefits for the first time, rose from 7,000 to 225,000.  Continuing claims, or those that continue to receive benefits after their initial claim, rose 6,000 to 1.493m and have been significantly rising over the past few weeks.  

What have the above recent reports done to the market? We’ve seen a huge rally in bonds, and this is exactly what we have been waiting for! Rates have dipped from the 7’s back into the mid to high 6’s range, and we still are anticipating rates to hit the 5’s first half of next year.  Merry Early Christmas, everyone! We are starting to see some rate relief finally.

To learn more about your Omaha, Nebraska mortgage options, reach out to us at jeremywilhelm.com.

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