Yesterday, I reported the straight facts on inflation. After holding our collective breath for the last month, the numbers are in.

And they look less than ideal.

CNN reports:

“Much of the June increase was driven by a jump in gasoline prices, which were up nearly 60% over the year. Americans faced record-high gas prices last month, with the national average topping $5 a gallon across the country. Electricity and natural gas prices also rose, by 13.7% and 38.4%, respectively, for the 12-month period ended in June. Overall, energy prices rose by 41.6% year-over-year.

“Real average hourly earnings – which represent wage growth adjusted for inflation – slumped 1% from May to June and are down 3.6% from June 2021, according to separate BLS data released Wednesday.”

As a result of inflationary pressures, the average American household will now need to spend about $493 more to get through the month than they did this time last year. With help from the Associated Press, let’s see how that breaks down:

Let’s begin with food, where grocery prices are up 12.2% over the year – their steepest climb since 1979.

• Eggs rose 33.1% in June.
• Butter rose 21.3%.
• Milk rose 16.4%.
• Chicken rose 18.6%.
• Coffee rose 15.8%.
• Hotdogs rose 16.3%.

Meanwhile, rent has risen 5.8% year-over-year… the most since 1986. And the average cost of new leases has soared 14% to an average of $2,016 a month, according to research by Redfin.

Also consider:

• Vehicle prices advanced 11.4%.
• Airfares, one of the few areas reporting month-over-month price decreases, still gained 34% year-over-year.
• Hotel costs are up 10%
• Restaurant bills have increased nearly 8%.

This all begs the so-far unanswerable question of when will it end? Honestly, I’m not sure I want to know anymore.

More Non-REIT News to Know About 

So what’s to be done about all of this?

In the past, our central banking mechanism, The Federal Reserve, has raised interest rates to offset demand and lower inflation.

But this is a balancing act – or at least it’s supposed to be – as inflation and interest both seriously affect consumer behavior and can have real consequences if not properly managed.

Considering these extreme times we’re living in, all eyes are now on Fed Chair Jerome Powell. Yesterday, I reported that many speculate he’ll raise the rate by 0.75%.

Today though, there’s a growing belief it will be as high as 1%.

Asked about last month’s hike, Powell said, “We’re going to react to the incoming data and appropriately, I think. So I wouldn’t want to put a number on what that might be.”

Yet so far, we haven’t seen any evidence that these interest rates are enough to cool demand. It’s just one more factor to keep the markets moving manically.

One thing’s for sure though. Whether it’s a 0.75% or 1% interest rate increase, the days leading up to the decision will interesting.

The World According to REITs 

Here’s some interesting news to know about concerning two renowned healthcare REITs that plan to unite.

Healthcare Realty Trust (HR) – a real estate investment trust (REIT) that operates outpatient medical facilities – says it will offload $1.7 billion in assets to help fund its $1.1 billion merger with Healthcare Trust of America (HTA).

It’s now under contract with five counterparties to sell 27 properties worth $807 million in asset sales and joint venture transactions. It also has letters of intent with three counterparties to sell 10 other properties for $295 million.

These transactions are set to close within 10 days of the HTA merger’s completion, which will finalize under the Healthcare Realty Trust name.

The current company’s president and CEO, Todd Meredith said:

“We have made significant progress towards the completion of our strategic combination with HTA. With these transactions, we have secured funding for the special cash dividend at an attractive cost of capital. We expect to continue to positively shape the combined company’s portfolio and source accretive capital through more asset sales and joint venture investment.”

This is clearly a very strategic move on both parties’ accounts. With so much movement in the healthcare space, HR has seen an opportunity to increase both capital and the quality of its assets.

I wish them all the best and will continue to monitor how this goes.

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