Housing Costs Surge in July, Accounting for 90% of Total Inflation

The latest consumer price index data from the Bureau of Labor Statistics reveals that housing costs significantly contributed to inflation in July, accounting for nearly 90% of the total increase. Shelter costs rose by 5.1% year-over-year and 0.4% month-over-month, surpassing economists' expectations. This monthly increase follows a smaller rise of 0.2% in June, indicating a concerning trend in housing expenses. The breakdown of the July increase shows a 0.5% rise in rent, a 0.4% increase in owners’ equivalent rent, and a 0.2% uptick in lodging away from home. Experts note that the nature of rental agreements, which often lock in prices for extended periods, creates a lag in reflecting current market conditions. Consequently, despite a cooling in new lease prices, overall housing inflation is projected to remain elevated beyond pre-pandemic levels until at least the end of 2025. Since January 2021, rents have surged by 22.3%, with both rental and owners’ equivalent rent costs increasing nearly 24% since the onset of the COVID-19 pandemic. In contrast, cumulative inflation stands at approximately 22%. The overall inflation rate for July was measured at 2.9% year-over-year, marking the first time it has dipped below 3% in over two years, providing a glimmer of hope amid rising housing costs.