flexiblefullpage - default
Currently Reading

Consumer Price Index Points to Elevated Inflation and Higher Interest Rates in 2022


Consumer Price Index Points to Elevated Inflation and Higher Interest Rates in 2022

Inflation is at its highest peak since the early 1980s, and 2022 may see more gains

January 14, 2022
CPI increase graphic
Image: Stock.adobe.com

In December 2021, the Consumer Price Index recorded a 7% year-over-year gain, the highest in nearly 40 years as a result of pandemic-driven supply-chain issues and a significant increase in government spending, according to NAHBNow. In contrast, the CPI measured an average annual growth rate of just 1.8% during the 2010s.

The NAHB predicts that the Federal Reserve will raise the federal funds rate three times in 2022 and taper asset-backed security purchases at an accelerated pace, which will cause interest rates to rise throughout the year. The second week of January saw a continuation of gains from the previous year as the 10-year Treasury rate rose from 1.4% at the start of December to higher than 1.7% into 2022.

Clearly, these increases highlight the importance of taming building material costs, including lumber prices that are rising yet again and have expanded beyond $1,100 per thousand board feet. New NAHB analysis finds that a key cause behind this price growth is insufficient production. For example, during the third quarter of 2021, domestic sawmill output was 1.3% lower than the third quarter of 2020.

Additional signs of inflation include a tighter labor market and growing wages. According to BLS estimates, job growth in December disappointed: The economy added only 199,000 jobs. Although the unemployment rate fell back to 3.9%, there is some evidence that labor market data are not fully accounting for the growing gig economy.

Read more

Related Stories

Housing Markets

Which States Are Attracting High-Earning Households and How That Affects State Financials

Households that make over $200,000 are in the minority, but their movement across states can make a significant difference

Housing Policy + Finance

Will Fannie & Freddie’s Conforming Loan Limit Increase in 2023? If So, By How Much?

Economists are watching sales and prices for what the new limits may be

Housing Policy + Finance

Falling Lumber Prices Reflect a Return to Normal for the Housing Market

Lumber prices benefited from the booming housing demand during the pandemic, but as demand slows, prices follow

boombox1 -
native1 - default

More in Category

native2 - default
halfpage1 -

Create an account

By creating an account, you agree to Pro Builder's terms of service and privacy policy.

Daily Feed Newsletter

Get Pro Builder in your inbox

Each day, Pro Builder's editors assemble the latest breaking industry news, hottest trends, and most relevant research, delivered to your inbox.

Save the stories you care about

Lorem ipsum dolor sit amet lorem ipsum dolor sit amet lorem ipsum dolor sit amet.

The bookmark icon allows you to save any story to your account to read it later
Tap it once to save, and tap it again to unsave

It looks like you’re using an ad-blocker!

Pro Builder is an advertisting supported site and we noticed you have ad-blocking enabled in your browser. There are two ways you can keep reading:

Disable your ad-blocker
Disable now
Subscribe to Pro Builder
Already a member? Sign in
Become a Member

Subscribe to Pro Builder for unlimited access

Lorem ipsum dolor sit amet, consectetur adipisicing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua.