Inflation ticks up in October, driven by housing costs
San José, CA – On Wednesday, November 13, the Department of Labor’s monthly report on inflation showed that the increase in the Consumer Price Index, or CPI, ticked to 2.6% measured on a year-to-year basis, which smooths out monthly spikes or plunges. The so-called “core” rate of inflation, which leaves out food and energy prices (which tend to vary more than other prices month to month), was an even higher 3.3% measured year over year.
The increase in the broad CPI from 2.4% in September to 2.6% in October was mainly driven by rising housing costs, which were up 4.9% on a year-over-year basis. While the overall increase in the CPI has fallen from 9% in 2022 to 2.6%, the drop in housing inflation has been much smaller, from 8.8% in 2022 to 4.9% last month, which is still more than half the peak.
The cost of housing is actually greater than what the CPI counts, as it doesn’t include the cost of insuring a home, which is rising at an 8.8% annual rate (and much faster in states such as Florida and California due to the increase in costs of natural disasters).
Inflation in housing costs may stop falling or even start to rise again if Trump carries out his pledge to deport undocumented immigrants. 13% of all construction workers are undocumented, one of the highest rates of all industries. If many of them are deported, a shortage of construction workers will drive up the costs of housing.
While Trump was elected largely on people’s dissatisfaction with the economy, in particular higher inflation, Trumps pledges of mass deportations and higher tariffs, or taxes on imports, could actually end up raising prices and increasing inflation.