CPI disinflation is expected to continue in January, with headline CPI growth expected to fall below 3% YoY, to the slowest pace seen since March 2021.
I wouldn't read too much into a single month's deviation - given that they both primarily track underlying rents, they will generally move in a similar pattern overtime.
Given that underlying spot market rental growth continues to remain relatively low, I continue to expect both OER and RPR to moderate gradually over the course of 2024.
Thanks again for your valuable work Steven, I read on your website that the impact of medium-term CPI weight revisions is an increase in year-on-year growth estimates, but if the weight of the services component increases, which If I'm not mistaken, it has yet to show most of its deflationary effects, I would expect an early rather than delayed achievement of the target, as its possible greater decline compared to the durable goods component would bring greater benefits to the annual trend. Where am I wrong?
Your line of reasoning does make sense, though given recent trends in durables prices, my latest medium-term forecast actually saw durables prices as a still larger driver of disinflation in 2024.
A key reason for this, has been the recent trends in motor vehicle prices, with significant downward pressure on retail used car prices expected to remain in the pipeline (which was evidenced by a large MoM decline in used car prices in January's CPI data).
What is up with owners equivalent rent v. Rent of primary
I wouldn't read too much into a single month's deviation - given that they both primarily track underlying rents, they will generally move in a similar pattern overtime.
Given that underlying spot market rental growth continues to remain relatively low, I continue to expect both OER and RPR to moderate gradually over the course of 2024.
Thanks again for your valuable work Steven, I read on your website that the impact of medium-term CPI weight revisions is an increase in year-on-year growth estimates, but if the weight of the services component increases, which If I'm not mistaken, it has yet to show most of its deflationary effects, I would expect an early rather than delayed achievement of the target, as its possible greater decline compared to the durable goods component would bring greater benefits to the annual trend. Where am I wrong?
Thanks Angelo!
Your line of reasoning does make sense, though given recent trends in durables prices, my latest medium-term forecast actually saw durables prices as a still larger driver of disinflation in 2024.
A key reason for this, has been the recent trends in motor vehicle prices, with significant downward pressure on retail used car prices expected to remain in the pipeline (which was evidenced by a large MoM decline in used car prices in January's CPI data).