Inflation Still Fairly Tame; Online Buying Increases
- Nov 18, 2015
Inflation inched up a little in October, according to the Bureau of Labor Statistics on Tuesday, but it’s still fairly weak beer. Over the last 12 months, the Consumer Price Index for All Urban Consumers increased 0.2 percent. The cost for food, energy, and all items except for food and energy (the so-called core rate of inflation, since food and energy are volatile) all increased modestly in October. The price of food, which was up 0.4 percent in September, rose 0.1 percent in October. The cost of energy, which declined in August and September, advanced 0.3 percent for the month, as the drop in the price of gas was outweighed this time by more expensive electricity and fuel oil (something for property managers to watch). The cost for all items less food and energy rose 0.2 percent in October, the same increase as in September.
Advances in the price of shelter—partly rents going up because of high demand and low supply—and medical care (going up because it almost always goes up) were the largest contributors to the overall increase in prices for the month, with the price of personal care, airline fares, recreation, alcoholic beverages, and tobacco also rising. By contrast, the price of apparel, new vehicles, household furnishings and operations, and used cars and trucks all declined in October. All in all, prices remain a mixed bag, with nothing rising or falling particularly fast.
For the real estate industry, construction costs are also edging up, but not skyrocketing, except in a few hot development markets. According to Engineering News-Record, construction costs as of July 2015 were up at an annual rate of 2.1 percent (the latest month for which figures are available), based on a survey of the 20 largest metros. Construction industry wages were up 2.9 percent year-over-year in July and materials cost were up 1.7 percent, both on an annual basis.
In a separate report on Tuesday, the Census Bureau confirmed once again what the retail industry and its landlords know all too well: the percentage of U.S. retail sales done online keeps creeping upward. Total e-commerce sales for the third quarter of 2015 came in at $87.5 billion, an increase of 4.2 percent from the second quarter, while total retail sales were up only 1.2 percent quarter-over-quarter. Year-over-year, e-commerce sales were up 15.1 percent, while total retail sales were up only 1.6 percent. As of 3Q 2015, e-commerce represented 7.4 percent of all total retail sales, a figure that has never decreased in 10 years (a decade ago, about 2.8 percent of sales were e-commerce).