The Multifamily Bear Case: This Week’s Data

December PPI (Producer Price Inflation) Report – Data Released 12/12/24

• What It Is: Measures the change in prices for goods and services before they reach consumers
• Up 0.4% month-over-month, on expectations of 0.2%, the highest increase since June
• The year-over-year rate came in at 3.0%, far above expectations, and the highest since February 2023

• Core PPI (excludes food and energy) jumped to 3.4% year-over-year, much higher than expected and the highest since February 2023

• What It Means: A much hotter than expected inflation number pushes the Fed further away from their 2.0% inflation target and may reduce the number of times they cut rates over the coming year

December CPI (Consumer Price Inflation) Report – Data Released 12/11/24

• What It Is: Measures the average change in prices that consumers pay for goods and services over the past month.
• Inflation rose 0.3% month-over-month bringing the annual rate up to 2.7%, the highest reading since July and trending in the wrong direction
• Core CPI (excludes food and energy) also rose 0.3%, higher than the expected 0.2%, bringing the annual rate up to 3.3%
• What It Means: Inflation remains sticky and has been moving further away from the Fed’s 2.0% target for months. This may reduce the number of times the Fed cuts interest rates over the coming year.

One of the more worrisome categories in the inflation reports has been food prices, which are back on the rise. The UN Food and Agriculture World Food Price Index has been now rising for 5 straight months. Since the beginning of 2020, global food prices are up 26.5%.