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Special Report

Inflation Research Brief

August 2023

Normalizing Rent Growth Points to Future
Cooling in Core Inflation

“Supercore” CPI at favorable level. The headline consumer price index increased by 3.2 percent year-over-year in July, trending up slightly from June’s 3.0 percent reading. Accelerated cost increases for food and some forms of energy ticked up the headline statistic for the first time since June 2022. While this could signal a bumpier inflation path ahead, market expectations for a continued CPI slowdown are anchored by a cooling job market and easing price pressures for most goods and services. Core CPI, which omits food and energy costs, slowed to 4.7 percent year-over-year in June, its lowest rate since October 2021. Further removing shelter from the measure, “supercore” CPI only lifted by 2.5 percent year-over-year. The housing component of inflation tends to be a lagging indicator that is expected to materially subside, reducing inflationary pressure.

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