WHAT TO WATCH: CONSUMER PRICE INDEX

What To WatchSigns of inflation can move the Stock and Bond markets and impact home loan rates, which are tied to Mortgage Bonds. Here are important details to know.

What is the Consumer Price Index (CPI) report? CPI measures consumer inflation and reports price changes on a predetermined basket of goods including transportation, rent, food, energy and medical care. The report is used to assess price changes associated with the cost of living.

What’s happened recently? Inflation reared its ugly head as CPI rose by 2.1 percent from December 2015 to December 2016. This is the fastest pace since the 12-month period ending June 2014 and up from 0.7 percent in 2015. Core CPI, which strips out volatile food and energy prices, rose 2.2 percent from December 2015 to December 2016.

What’s the bottom line? Inflation can lead to increasing home loan rates by reducing the value of fixed investments like Mortgage Bonds. For now home loan rates remain attractive and near historic lows.

I’ll continue to monitor economic reports closely, but if you have any immediate questions, please call or email today.

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