Consumer inflation increased 0.9% in October, according to the latest data from the Labor Department, which reported prices are up 6.2% YoY—the highest increase since 1990.
While economists have been predicting slowdowns in price gains, high demand and constrained supply are weakening purchasing power—a mirror image of what has been occurring in real estate markets nationwide.
While price growth occurred across most sectors, on the higher end, the energy index increased 4.8% since September and gasoline has risen 6.1%.
As the Fed typically increases rates in order to combat inflation, the real estate industry will need to keep a close eye on mortgage rates, which are largely influenced by the fluctuations driven by the central bank’s movements.
While mortgage rates have wavered over the last several weeks, increasing slightly and coming back down in the latest report from Freddie Mac, we are still seeing above 3% thresholds and experts say they expect rates to reach near 4% by the end of 2022.
The latest report of wholesale prices, however, provides a glimmer of hope that inflation spikes will subside as the pandemic situation improves. For the Producer Price Index, monthly price increases slowed compared to earlier this year.
Liz Dominguez is RISMedia’s senior online editor. Email her your real estate news ideas to lizd@rismedia.com.
