The U.S. experienced a significant surge in consumer inflation in August, largely due to rising fuel prices, pushing investors towards real estate investment trusts (REITs) such as Invitation Home, American Homes (NYSE:AMH) 4 Rent, and Centerspace. These trusts are increasingly viewed as effective hedges against inflation.
The Labor Department reported a 0.6% month-over-month increase in the consumer price index (CPI) for August, marking the largest monthly gain in 14 months. When compared to the same month last year, inflation rose by 3.7%.
Core CPI, which excludes volatile food and energy costs, also saw an uptick of 0.3% last month. This marked a notable increase from the 0.2% rise observed in the two preceding months. The annual core CPI rate also jumped to 4.3%.
Several factors contributed to this inflationary trend. The cost of gasoline, food, and shelter all increased in August. Airfares witnessed almost a 5% rise last month after four consecutive months of decline, contributing significantly to the overall inflation figure. Additionally, prices for trucks, cars, auto insurance, and home furnishings also saw increases during the same period.
Oil prices have been on an upward trajectory recently due to expectations of robust demand and tighter supply conditions. The Organization of the Petroleum Exporting Countries (OPEC) has projected that global oil demand will rise by 2.25 million barrels per day next year.
This spike in oil prices has led to increased transportation costs which have subsequently pushed up the price of essential goods. Despite these challenges, REITs like Invitation Home, American Homes 4 Rent, and Centerspace continue to attract investors looking for a shield against inflation.
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