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CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

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Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#11

Post by Aurornis »

shoo wrote: post #7

I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation. That said, it's curious that this CPI news release highlighted "shelter" as a driver: > The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly i…

> The US may import a lot of things... but probably not shelter.

Housing requires construction materials, tools, and fixtures. Tariffs increase the cost of all of these, including domestically produced materials due to the second order effects.

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#13

Post by mlinsey »

tlogan wrote: post #6

If you look at the numbers, the key driver is rents (technically listed as "shelter"). Shelter has a large weight in the CPI basket, and its 12-month increase was 3.6% (comparing to 2.9%) Rents in San Francisco (and LA) are skyrocketing. And that cannot be easily explained. Not sure what’s causing this. What do you think?

Those markets are very supply constrained. Despite a few recent piecemeal reforms, it's still very hard to build new housing (and it takes time to build more, with things like construction costs also becoming more expensive recently).

When supply is constrained, anything that increases demand - like return-to-office mandates finally bringing back workers who left for other states during the pandemic, or a boom in AI investment causing headcount and salary growth in a small sector that's very geographically concentrated in a single rent market - will greatly increase the price.

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#14

Post by blensor »

shoo wrote: post #7

I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation. That said, it's curious that this CPI news release highlighted "shelter" as a driver: > The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly i…

I heard that too, and it kinda makes sense, but what I also heard is that this one time price increase may not come all at once but drawn out over a longer period because some industries will eat the tariffs longer than others.

So instead of a massive inflation bump in one month you may get a sustained inflation rise over 6-12 months for example, which from the consumers POV probably looks just like higher inflation overall

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#15

Post by Aurornis »

tlogan wrote: post #10
shoo wrote: post #7

I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation. That said, it's curious that this CPI news release highlighted "shelter" as a driver: > The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly i…

My naive expectation was: - Rents would go down because deportation of illegals will reduce demand - Prices of goods would skyrocket because of tariffs But instead, rents went way up. Could this be driven by the push to return to the office?

> Rents would go down because deportation of illegals will reduce demand

The number of people deported is negligible. Around 200,000 people.

Despite all the news and drama, this number isn’t actually very different than normal. Any large country will have a steady stream of deportations if they enforce immigration laws. It has been like this for a long time.

Don’t believe the news and political rhetoric. Look at numbers. Do no trust any political claims without looking at the numbers.

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#16

Post by tlogan »

marticode wrote: post #9
tlogan wrote: post #6

If you look at the numbers, the key driver is rents (technically listed as "shelter"). Shelter has a large weight in the CPI basket, and its 12-month increase was 3.6% (comparing to 2.9%) Rents in San Francisco (and LA) are skyrocketing. And that cannot be easily explained. Not sure what’s causing this. What do you think?

Lack of construction is likely the problem. High financing costs, expensive construction material (a lot of it is imported, like Canadian wood) and disappearing construction workers is probably all contributing.

But house prices did not increase.

According to Redfin, the median home sale price was up 1.2% YoY in July 2025. [1]

[1] https://www.redfin.com/us-housing-market

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#17

Post by throw0101d »

shoo wrote: post #7

I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation. That said, it's curious that this CPI news release highlighted "shelter" as a driver: > The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly i…

> I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation.

That assums tariffs are consistent. How consistent has the administration been on tariff rates?

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#18

Post by Yoric »

shoo wrote: post #7

I've heard a few economists interviewed about the estimated impact of tariffs, an argument is that tariffs should lead to higher prices for US consumers, but as a one-time price increase, not a sustained level of price inflation. That said, it's curious that this CPI news release highlighted "shelter" as a driver: > The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly i…

There have been talks of collusion/price-fixing/monopoly abuse on rents in the US, with a single company (I don't remember the name) providing services (including picking prices) to a large majority of landlords.

Could this be related?

Re: CPI for all items rises 0.4% in August, 2.9% YoY; shelter and food up

#20

Post by Yoric »

Aurornis wrote: post #15
tlogan wrote: post #10

Earlier quoted context omitted.

My naive expectation was: - Rents would go down because deportation of illegals will reduce demand - Prices of goods would skyrocket because of tariffs But instead, rents went way up. Could this be driven by the push to return to the office?

> Rents would go down because deportation of illegals will reduce demand The number of people deported is negligible. Around 200,000 people. Despite all the news and drama, this number isn’t actually very different than normal. Any large country will have a steady stream of deportations if they enforce immigration laws. It has been like this for a long time. Don’t believe the news and political rhetoric. Look at numb…

As far as I can tell from a distance (I live in Europe), it seems to be more violent than usual, though. Is that correct?
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