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Wednesday, June 17, 2009


CPI following PPI

following on yesterday's comments about the producer price index -- the consumer price index today came in as a deflation scare number as well -- seasonally adjusted CPI-U YoY all items change is (-1.3%).

This is the largest decline since April 1950 and is due mainly to a 27.3 percent decline in the energy index.

the somewhat-controversial owners equivalent rent metric -- which accounts for 24.4% of CPI -- is up strongly in may and 2.1% year-over-year. this doesn't comport very well with data and anecdotes describing falling rents around the country. this drew the attention of calculated risk, who notes that OER is the result of a survey question, whereas actual REIT rent-receipt data suggests rents are flat year-over-year. furthermore, the leading index of apartment tightness suggests that further deflation of rents and OER is likely. so the deflationary impulse may be underestimated somewhat in CPI at the moment.

UPDATE: a correction from CR.

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