Penn State/ACY Alternative Inflation Rate
The Penn State Institute for Real Estate Studies (IRES) announces the release of the Penn State/ACY Alternative Inflation Index. Each month, IRES will update the new Penn State/ACY Alternative Inflation Index and compare it to the most recent CPI and PCE inflation measures released by the Bureau of Labor Statistics and the Bureau of Economic Advisors. The Penn State/ACY Alternative Inflation Index was first introduced in Ambrose, Coulson, and Yoshida (2018), and it incorporates their Marginal Rent Index, which captures a different measure of house price changes based on marginal rents.
From August 2017 to August 2018, the Penn State/ACY CPI Index increased from 136.8 to 142.4 suggesting a 4.0% inflation rate over this period. In contrast, the Bureau of Labor Statistics reports that the year-over-year change in the BLS CPI was 2.7% (increasing from 139.3 to 143.0). The primary factor driving the difference in these inflation rates is the Penn State/ACY Marginal Rent inflation rate, which accelerated from 7.2% in July 2018 to 7.6% in August 2018. Based on Ambrose, Coulson, and Yoshida (2018), the ACY Marginal Rent Index leads the BLS rent series by 13 months. Thus, the current ACY Marginal Rent inflation rate suggests further acceleration in BLS rental inflation approximately one-year from now.
Interactive graphs and downloadable data for the Penn State/ACY Alternative Inflation measures are available at https://sites.psu.edu/inflation/. The site will be updated monthly as new data is released.