If the U.S. economy were a reality show, this week’s guest star was inflation—and it showed up ready to stir the pot.
The big plot twist? The much-anticipated Consumer Price Index (CPI) report came in exactly as Wall Street expected on Tuesday, but Thursday’s Producer Price Index (PPI) report brought a jaw-dropper no one saw coming. Even with the shock factor, mortgage rates somehow played it cool, ending the week nearly unchanged.
Here’s the tea: Core CPI (the one that ignores those unpredictable food and energy prices) rose 0.3% in July, right on forecast. But compared to a year ago, it’s up 3.1%—the hottest annual pace since February. Translation: prices are climbing faster than we’ve seen in months.
Then came the real headline-maker—Core PPI—a measure of what producers are paying before prices hit consumers. Everyone expected a mild 0.3% rise from June. Instead? A sizzling 0.9% jump, the biggest monthly spike since June 2022. Year-over-year, it’s up 3.7%, blowing past last month’s 2.6%. PPI may not carry as much Wall Street weight as CPI, but the numbers are far from the Fed’s 2% comfort zone. Higher tariffs could keep the heat on in the months ahead.
So what’s next? Markets are betting the Fed will make a 25-basis-point rate cut in September, with another likely before year’s end. But as always, the Fed loves to keep us guessing.
Meanwhile, consumers are still in spending mode. July retail sales rose 0.5% from June—exactly as expected—and a healthy 3.9% compared to last year. The splurges? Cars, home furnishings, and apparel. Despite whispers of economic slowdown, American shoppers clearly haven’t gotten the memo.
Bottom line: Inflation’s still running hot, rates are poised for potential cuts, and consumer wallets are wide open. Buckle up—the next few months could be a wild ride for the housing market.
Thinking about buying, selling, or refinancing before the Fed makes its next move? Let’s talk strategy now—because in a market this unpredictable, timing is everything. Contact me today and let’s make your next move your best move.
