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Inflation Watch: Neither insurance nor housing inflation print at levels consistent with 2% inflation

Is there a path to a rate cut from the Fed due to receding inflation pressures in housing and insurance? If goods inflation remains muted, the Fed will likely get a chance to cut. We take a look at the details here.
2024-06-21

Housing and insurance inflation have played a major part in keeping service-prices elevated in the US, and especially auto-insurance cost (an important component in transportation services) kept accelerating until last month. The interesting thing is that these exact two categories probably lag the actual economic cycle the most, which gives us a decent chance to paint a picture of the path ahead in services inflation.

According to our production to inventory to sales ratio in vehicles we will continue to see falling motor vehicle insurance inflation in YoY terms this year, before a trough at too elevated levels during 2025.

Chart 1: Disinflation in auto insurance but at high levels

Is there a path to a rate cut from the Fed due to receding inflation pressures in housing and insurance? If goods inflation remains muted, the Fed will likely get a chance to cut. We take a look at the details here.

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