Last week, we talked about how the Consumer Price Index number agreed on inflation was released, and it came in hotter than expected, and especially in one key area, that rents went up so much in one month, 0.8% in just one month.
When Will Inflation Peak?
I’m going to talk a little bit this week about how the inflation number is calculated, and why we might see inflation peaking here soon and starting to go down a little bit. What we’re looking at here is what’s called the Core Consumer Price Index. And this is the number that strips out food and energy price increases or decreases. But we all know food and energy has gone up so much recently. But that being said, Core Consumer Price Index strips out food and energy, and that was 6.6% year over year, YOY means year over year. What they do is they take a 12-month look back, and when they come out with that September number, it replaces last year’s September number. This year’s September number was 0.4%. And if you look back, that replaced last year’s 0.3%.
That means the core year over year number went up by 0.1%. When this number came out in September, it was 6.5%, this month, 6.6%. Now, if you look forward though, these numbers are higher heading into the winter. October of last year was 0.6%, November was 0.5%, so on and so forth. If the numbers stay down, so 0.4% for September, the August number this year was 0.1%. If those numbers stay down, it’s likely that inflation could start decreasing. And if in fact that happens, that could lead to lower mortgage rates here moving forward, which is good news for those of you buying homes. That being said, I talked about this last week, it is a great opportunity right now. There’s not as many buyers out there looking, so it’s not as competitive. It’s a good time to get a better deal to work in things like seller concessions to cover your closing costs. We also have strategic ways to get a lower payment right now despite the higher rates, and the seller can help subsidize that.
Call me if you want to look at those options, happy to talk to you about that. And once again, my name’s RJ Baxter, Fairway Independent Mortgage. Have a great rest of your day.