PEARSON PLC ORD 25P  PSON.L 
$1,023.50  $2.50  0.24%  
DIAGEO PLC ORD 28 101/108P  DGE.L 
$2,512.50  $16.00  0.64%  
RECKITT BENCKISER GROUP PLC ORD  RKT.L 
$4,408.00  $85.00  1.89%  
LLOYDS BANKING GROUP PLC ORD 10  LLOY.L 
$59.66  $0.0000  0.00%  
MELROSE INDUSTRIES PLC ORD GBP0  MRO.L 
$548.00  $8.20  1.47%  
FRESNILLO PLC ORD USD0.50  FRES.L 
$583.00  $24.00  3.95%  
NATWEST GROUP PLC ORD 107.69P  NWG.L 
$333.00  $4.50  1.33%  
WEIR GROUP PLC ORD 12.5P  WEIR.L 
$1,867.00  $46.00  2.40%  
STANDARD CHARTERED PLC ORD USD0  STAN.L 
$704.40  $17.00  2.36%  
ENDEAVOUR MINING PLC ORD USD0.0  EDV.L 
$1,726.16  $79.84  4.42%  
OCADO GROUP PLC ORD 2P  OCDO.L 
$410.88  $0.22  0.05%  
ANGLO AMERICAN PLC ORD USD0.549  AAL.L 
$2,208.50  $13.50  0.61%  
ASHTEAD GROUP PLC ORD 10P  AHT.L 
$5,088.00  $154.00  2.94%  
SEGRO PLC ORD 10P  SGRO.L 
$892.40  $8.80  0.98%  
BAE SYSTEMS PLC ORD 2.5P  BA.L 
$1,234.00  $25.50  2.02%  
VODAFONE GROUP PLC ORD USD0.20   VOD.L 
$70.08  $0.36  0.51%  
HSBC HOLDINGS PLC ORD $0.50 (UK  HSBA.L 
$652.60  $10.40  1.57%  
GLENCORE PLC ORD USD0.01  GLEN.L 
$424.20  $9.15  2.11%  
ROLLS-ROYCE HOLDINGS PLC ORD SH  RR.L 
$430.40  $13.50  3.04%  
UNITE GROUP PLC ORD 25P  UTG.L 
$909.50  $12.50  1.36%  
ANTOFAGASTA PLC ORD 5P  ANTO.L 
$1,897.50  $48.50  2.49%  
CRODA INTERNATIONAL PLC ORD 10.  CRDA.L 
$3,985.00  $74.00  1.82%  
KINGFISHER PLC ORD 15 5/7P  KGF.L 
$270.80  $6.70  2.41%  
SPIRAX GROUP PLC ORD 26 12/13P  SPX.L 
$8,547.31  $82.69  0.96%  
TAYLOR WIMPEY PLC ORD 1P  TW.L 
$152.96  $3.64  2.32%  
WPP PLC ORD 10P  WPP.L 
$717.40  $24.00  3.24%  
RIO TINTO PLC ORD 10P  RIO.L 
$4,883.50  $54.00  1.09%  
HOWDEN JOINERY GROUP PLC ORD 10  HWDN.L 
$909.50  $38.00  4.01%  
MONDI PLC ORD EUR 0.22  MNDI.L 
$1,537.00  $17.00  1.09%  
HARGREAVES LANSDOWN PLC ORD 0.4  HL.L 
$1,092.50  $3.50  0.32%  
BARRATT DEVELOPMENTS PLC ORD 10  BDEV.L 
$498.10  $8.50  1.68%  

Rising Rents Push US Inflation Higher, Rate Cuts Still Expected in 2024

by Violet Dawson
0 comment

The Labour Department’s report highlighted a significant increase in housing costs, emphasizing the ongoing struggle with increasing rents.

In January, US consumer prices experienced a higher-than-expected surge, primarily due to the increasing cost of rental housing. The Consumer Price Index (CPI) reported a 0.3% increase, the largest in four months, with shelter, including rents, accounting for over two-thirds of this rise. While this spike in inflation may raise concerns, it has not altered the widespread expectation that the Federal Reserve will initiate interest rate cuts in the first half of 2024.

The Labour Department’s report highlighted a significant increase in housing costs, emphasizing the ongoing struggle with increasing rents. The impact of the surge in rental prices, however, may not be fully reflected in the Personal Consumption Expenditures (PCE) price indexes, the benchmarks used by the Federal Reserve to assess progress toward its 2% inflation target.

Some economists argue that the model used by the government to adjust for seasonal fluctuations may not have completely accounted for the price increases initiated by businesses at the beginning of the year. “It’s important not to overreact and jump to the assumption that an inflationary resurgence is developing,” cautions Seema Shah, Chief Global Strategist at Principal Asset Management. Shah emphasizes that inflation drivers in January, especially in segments less crucial for the Fed’s favoured core PCE measure, may not be indicative of a broader trend. Forward-looking indicators suggest that these inflationary pressures are expected to ease in the coming months.

Analyzing the CPI data reveals that food prices experienced a 0.4% increase, the most significant in a year, partially attributed to winter storms. Grocery food inflation also rose by 0.4%, marking the largest gain since January 2023. Non-alcoholic beverages on the other hand saw a notable 1.2% increase, while gasoline prices dropped 3.3%. In the 12 months through January, the CPI increased by 3.1%, slightly moderating from the 3.4% rise in December but still reflecting persistent inflationary pressures.

President Joe Biden acknowledges the need to address costs, focusing on the moderation in annual inflation while recognizing that there is still work to be done.

Despite these concerns, financial markets adjusted their interest rate-cut expectations from May to June after the release of the CPI report. Stocks on Wall Street traded lower, the dollar rose against a basket of currencies, and US Treasury prices fell.

The Federal Reserve, however, remains cautious and emphasizes that they are not in a rush to lower borrowing costs. Policymakers seek convincing evidence that inflation is on a sustained slow path before considering further rate cuts. Since March 2022, the Fed has already raised its policy rate by 525 basis points to the current 5.25%- 5.50% range.

The core CPI, excluding volatile food and energy components, rose by 0.4% recently, the largest advance since May. This increase was driven by a 0.6% surge in the shelter, with the Owner’s Equivalent Rent (OER) experiencing the most significant increase in nine months. While rental inflation has remained elevated, economists expect it to lead the inflation lower this year as rent measures in the CPI catch up with independent gauges.

Services inflation saw a 0.7% jump, the biggest gain in a year, with medical care services increasing by 0.7%, driven by a 1.6% surge in hospital services – the most since October 2015. Despite these increases, some analysts view January as subject to seasonal-adjustment-busting one-time price increases, especially in services.

Used car and truck prices on the other hand dropped by 3.4%, marking the largest decrease since May 1969. Apparel prices experienced the most significant decline in nearly three years. With these fluctuations, the core CPI advanced by 3.9% on a year-on-year basis, matching December’s increase.

As economists estimate the core PCE price index to have increased by 0.3% in January, the direction of the economy remains resilient. The precise timing of rate cuts, whether in May, June, or July, appears less crucial than the overarching direction, according to Elyse Ausenbaugh, Global Investment Strategist at J.P. Morgan Wealth Management.

You may also like

Leave a Comment

Subscribe to Our Newsletters

We are a UK-based business awards firm that specializes in recognizing and celebrating exceptional achievements across various sectors. Our team of experts is dedicated to delivering world-class services, including event management, judging, and award design. With a focus on quality and excellence, we aim to showcase the best of international businesses and inspire future success.

Contact us: [email protected]

© 2022 – The Business Pinnacle. All Right Reserved. Developed by Aapta

The Business Pinnacle