Consumer prices remained unchanged in October on a seasonally adjusted basis, after increasing 0.4% in September, according to the U.S. Bureau of Labor Statistics (BLS). Over the last 12 months, inflation has increased 3.2%, according to the Consumer Price Index (CPI).
The index for shelter—which accounts for more than 40% of core CPI—increased by 0.4% in October, offsetting a decline in the gasoline index in October. Among the other indexes that rose in October include the index for motor vehicle insurance (+1.9%), recreation (+3.2%), personal care (+6.0%), and household furnishings and operations (+1.7%).
The indexes for owners’ equivalent rent (OER) increased by 0.4%, and rent of primary residence increased by 0.5% in October. According to an analysis by the NAHB, monthly increases in OER have averaged 0.5% over the last 10 months and have been the largest contributors to headline inflation in recent months.
“The Fed’s ability to address rising housing costs is limited as shelter cost increases are driven by a lack of affordable supply and increasing development costs. Additional housing supply is the primary solution to tame housing inflation. The Fed’s tools for promoting housing supply are at best limited. In fact, further tightening of monetary policy will hurt housing supply by increasing the cost of AD&C financing,” the NAHB wrote in its analysis of the CPI report. “Nonetheless, the NAHB forecast expects to see shelter costs decline further later in 2023, supported by real-time data from private data providers that indicate a cooling in rent growth.”