Housing has a weight of 40% in the core CPI index, and leading indicators of rent inflation are showing signs of rolling over, but the leading indicators in the charts below suggest that it may take some time before housing inflation returns to or below pre-pandemic levels. The implication for markets is that it is not enough that inflation has peaked. We also need to see key components of the CPI, such as housing, return to pre-pandemic levels of inflation, which is required to get headline inflation back to 2%.
Source: Bloomberg, Haver, Apollo Chief EconomistSource: BLS, Penn State, Apollo Chief Economist
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