What new warehouse data is signaling about inflation and the economy

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Warehouse prices are still high, but prices did not increase quarterly in Q4 2022, according to a recently released WarehouseQuote report.

“Prices remain at these levels due to inventory levels not falling significantly in November and December,” said Jordan Brunk, head of marketing at WarehouseQuote.

Warehouse prices and inventory data are indicators of consumer strength. Even if inflation slows down, inventory costs remain high because there is more inventory, leaving less space. The property is sold at a premium. When buyers buy, there is more demand, and sellers take more products from warehouses, with the extra space putting a premium on inventory prices.

The December inflation data released on Thursday morning was, as expected, a sign of a gradual slowdown in activity. The price of a broad basket of goods and services fell 0.1% for the month, the biggest monthly decrease since April 2020. Excluding unchanged food and energy prices, the so-called core CPI rose 0.3%, meeting expectations.

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Previous records were made last year when companies introduced more products thinking that consumers would continue to buy. But due to reduced stimulus spending and a slowdown in the economy amid high inflation, consumer spending has fallen and consumers have become more selective, forcing retailers to move more to move sales.

As a result, production has slowed, “but we still have a ways to go before we reach ‘normal’ inventory levels,” WarehouseQuote said in the report.

Sales remain high, it said, rising 17% in the 12 months between October 2021 and October 2022.

Brunk tells CNBC that despite the increasing supply, and lower commodity prices, he expects the recent strength in warehouse prices to continue to rise due to a combination of lower prices, industrial property leases, and operating costs, as well as lower warehouse entrances. which were newly built due to rising incomes and recessions.

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In price volatility over the last three quarters of last year, the Northeast rose the most, at 12%, compared to the Q1 2022 baseline. The Midwest and West Coast regions also saw increases of 8% and 7%, respectively.

“The Northeast has seen an increase because of trade disruptions,” Brunk said, referring to the shift in California exports to East Coast ports led by New York. “This increase in port traffic also led to an increase in warehouse prices in the Northeast region. We continue to look at this as trade continues to move steadily along the East Coast and Gulf.”

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New York has been the nation’s busiest port for months, surpassing California and threatening its long-time host. Carriers have pulled out of ports including Los Angeles and Long Beach because of labor union concerns and port control battles. A recent CNBC Supply Chain survey revealed that many logistics managers are worried about moving sales back to the West Coast.

A new report by WarehouseQuote cited the movement of furniture from the West Coast to Texas as one example of this trade.

The Southeast was down, but Brunk tells CNBC that Georgia, which has processed many commercial containers, has seen an increase, especially at the port of Savannah.

The general availability and rental rates in the Georgian market are increasing by 5.37% per year (2021-2022), according to its data.

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