How October Inflation Numbers Impact The CRE Outlook

Is Inflation Coming Down?

• October CPI data came in lower than expected, with producer prices, steel and lumber costs, and shipping expenses falling as well
• Inflation is well ahead of the target level, and an 8% annual rise in producer prices suggests there are still more costs to be passed onto consumers

Federal Reserve Signals Smaller Rate Increases

• Chairman Powell has been clear in his commitment to achieving 2% inflation
• The Fed is expected to raise the overnight rate 50 basis points in December, then adopt a slower pace of rate hikes in 2023

Potential Impacts on CRE

• More stable expectations are likely to alleviate some of the pressure that has forced investors to recalibrate strategies mid-deal
• Diminished uncertainty can help reduce the expectations gap between buyers and sellers

*Through October
Sources: Marcus & Millichap Research Services, BLS

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