Consumer Price Inflation—January 2024
What happened to inflation in December
°Õ´Ç»å²¹²â’s data showed a third uptick in month-to-month inflation that pushed the annual inflation rate up to 3.0% for the 12 months ending January 2025. This was the highest annual rate since June 2024, and the highest monthly rate of inflation since August 2023. Shelter inflation also picked up month-to-month (0.4%), but the annual inflation rate continued to trend down from 4.6% last month to 4.4% in January, making it a relatively bright spot in the report.
What else did we see in the December inflation data?
Core inflation—the index that excludes more volatile food and energy prices and is considered a good indicator of underlying price pressure–also saw an uptick. Core inflation climbed from 0.2% in December to 0.4% in January, and the annual inflation rate ticked up to 3.3%.
What does this mean for homebuyers and sellers
The uptick in inflation alongside a healthy jobs market has further reduced rate-cut expectations with the market now anticipating that the Fed will hold off until September for the next cut. The labor market continues to hum with unemployment slipping back to 4.0% despite a slower pace of hiring in January. This is likely to snap the three week streak of falling mortgage rates, putting pressure on buyers in the lead up to the spring homebuying season. It is also likely to reduce some of the home purchase optimism seen in the market. Already a recent survey showed that fewer consumers expect to see mortgage rates drop in the 12 months ahead.