Sticky. That’s probably the most appropriate word we can use to describe the “inflation frustration” that still lingers right now. The numbers are improving year-over-year (moving lower), but perhaps not as fast as we would like. The latest CPI data (Consumer Price Index) was released on Wednesday morning and showed a rise of 3.7% (estimates were 3.2%) on an annual basis according to the Bureau of Labor Statistics. Most of the increase was attributable to the spike in oil and gasoline prices in August. Some of the economists we have been following expect this increase to be temporary in nature, but we will have to watch and see. Aside from the energy increase, there are signs that inflation, overall, is retreating in many areas. Keep in mind that the numbers have pulled back significantly from the peak level of 9.1% in June of 2022. For now, the slight increase is being viewed as a “bump” in the road and not an indication of a reversal in the broader trend lines.
Following the CPI numbers on Wednesday, the PPI (Producer Price Index – a measure of what producers get for their goods and services) was released on Thursday morning. The PPI increased a seasonally adjusted 0.7% in August, higher than the 0.4% estimate and the biggest monthly gain since June 2022. If you exclude the food and energy portions from the numbers, then the data showed a modest increase of only 0.2% which would have been in line with expectations. Again, the culprit in this data shows that the spike in energy had other ripple effects across the economy. From a broader market perspective, the CPI is the more closely scrutinized metric to watch, but both measures are meaningful for any signs of changes, expected or not. At the end of the day, our financial markets took these numbers in stride, and the broader reaction was modest to muted for the most part.
So, what are the other things we are monitoring as some cooler weather starts to move in? I came across an interesting article discussing apartment rents. Rent increases in the August data showed a significant slowdown to +0.22% from the August 2022 levels. A year ago those increases were in the +11% range, so any slowdown there is welcome news for many. The number of new units being built is at a 50-year high, with more than 460,000 expected to be completed this year alone. For once, renters might be seeing more options than in years past, giving landlords less pricing power for now. Keep in mind these are very broad statistics, but in some of the hot markets like Austin, Phoenix, Las Vegas and Atlanta, prices are coming down according to the data. However, as always, there is another side to this equation. With higher rates now settling in for the foreseeable future, the number of new projects will slow considerably over the coming years. These housing and apartment issues will likely linger for some time so be prepared.
As your trusted advisors, we always like to pass along any incremental and pertinent trends we are seeing. A recurring theme in many of our recent client phone calls and meetings has been the cost of our personal insurance policies. I’m sure many of you have seen significant increases in your rates over the last year or two. These increases can likely be linked directly to the increasing number of natural disasters we have seen across our beautiful country. We are all feeling the impact of the costs being incurred by many. We are strong advocates of “shopping” your personal policies from time to time to ensure you are receiving true market rates with the appropriate coverages you need. It never hurts to revisit these and know what options you might have. You might be surprised at the amount of annual savings you could uncover. Just because you have been with the same carrier for 10+ years or more, doesn’t mean they are always looking out for your best interests. We do our best to stay in touch with the industry trends, and this is one area where your options are likely to be broader than you might think. As the costs of many things in our life continue to edge higher, this is one area we tend to overlook!
As we close out another week, I wanted to take a moment to say Happy Rosh Hashanah to our clients and colleagues celebrating the New Year and High Holy Days this weekend. Any opportunity to spend time with family and friends is time well spent. Enjoy!
Christopher E. Wasson, CFP®
Mosaic Asset Partners, LLC
1122 Kenilworth Drive, Suite 310
Towson, MD 21204
410.821.0089 fax 410.821.5993
Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Mosaic Asset Partners, LLC is not affiliated with Kestra IS or Kestra AS. Investor Disclosures: https://www.kestrafinancial.com/disclosures
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.