CPI Today: Why Housing Costs Decide the Inflation Story

The Bureau of Labor Statistics releases the September Consumer Price Index at 8:30 a.m. Eastern (6 p.m. in India). It could shape the Federal Reserve's next move and, in turn, mortgage rates.

What was the last reading?

August CPI rose 0.4% on the month and 3.4% over 12 months. Core inflation, which excludes food and energy, was 2.4%. Shelter rose 0.3% in August after a 0.1% gain in July, with rent and owners' equivalent rent each up 0.2%.

What do forecasters expect?

Published previews pointed to headline inflation of about 3.7% and core of about 2.5%, with a monthly gain as high as 0.6% in one preview. These are expectations, not results.

Why does housing matter so much?

Shelter makes up about 35.3% of the CPI basket, against 3.8% for gasoline, so it carries roughly nine times the weight (our calculation). Gasoline moves the monthly number, but shelter decides how long inflation sticks around. Pump prices averaged about $4.35 on October 5, after rising earlier in September.

What does it mean for mortgage rates?

A hot reading raises the odds of more Fed hikes, which pushes yields and mortgage rates higher. A cooler one could ease pressure. Freddie Mac's 30-year rate was 7.40% on October 8.

What comes next?

PPI is due October 15, the Fed meets October 27 and 28, and September PCE inflation follows on October 29.