CPI Housing
Inflation-Keeping The Fed On Hold
Inflation is weak in July but the rebound in oil prices, the renewed weakness in the dollar and the strength in Chinese Yuan are all positive for inflation expectations in the near term. The disinflationary headwinds from outside of the U.S. are only getting stronger, not weaker. It’s hard to disagree with the market’s low rate hike expectations.
Inflation Pressure Anemic
Inflation measures are broadly in line with expectations, and overall inflation pressure is anemic. We maintain our view that inflation will be a non-factor in the first half of 2014, and it might increase moderately in the second half. Inflation on the producers’ level is weak, too and the PPI inflation pipeline doesn’t seem to pose any immediate inflationary threat either.
Six Month Readings Look More Favorable Than Twelve Month Readings
In all of the primary inflation measures monitored in our Inflation Watch publication, the six month rates of change moved lower in July. For the most part, the twelve month readings have continued to rise. This action is likely pointing to diminishing inflation pressures for the months ahead.
CPI “Housing” Cooling Off
One development that is currently dampening rent hikes is the increasing conversion of condo units to rental units, increasing the overall supply of rentals.
2007 Outlook: CPI Accelerating In Second Half, But Economy Slowing
Still believe interest rates could be headed higher in 2007. While the economy does seem to be slowing and a recession is a possibility by early 2008, we expect the twelve month rate of inflation to accelerate in the second half of 2007.
Inflation Watch
CPI still expected to decelerate over the next four months as current readings get compared to above average readings a year ago. The final three months of the year, however, could be another story.
Inflation Watch
Raised our 2006 CPI estimate (mid-May) to +4.5% from initial projection of +4.0% or less.
Inflation Watch
The Major inflation concerns are rising wages, low unemployment, a continued strong economy, and additional pass through of higher energy prices.
Inflation Watch
CPI twelve month rate will move higher in second half of year because comparisons will be against relatively low readings from 2004.
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