Why Inflation Numbers Don’t Match What You Feel
A simple explanation of CPI, Truflation, and what they mean for Manhattan Beach, Hermosa, and Redondo real estate.
If you’ve been following the news lately, you’ve probably seen headlines like:
“Inflation is cooling.”
“Prices are still rising.”
“The Fed may cut rates soon.”
It can feel hard to know what’s real — especially when housing costs still feel extremely high.
One reason for the confusion is that there are now different ways of measuring inflation. Two of the most talked-about are the official government index (CPI) and a newer real-time index called Truflation.
Here’s the simple explanation — and why it matters for real estate in Manhattan Beach, Hermosa Beach, and Redondo Beach.
The Official Inflation Measure: CPI
The inflation number you hear most often comes from the U.S. Bureau of Labor Statistics. It’s called the Consumer Price Index (CPI).
CPI tracks the price of a “basket” of everyday goods and services, like:
groceries
gas
medical care
transportation
rent
It’s considered the official inflation gauge, and it’s what the Federal Reserve uses when deciding whether to raise or lower interest rates.
The catch? CPI updates only once per month and moves slowly.
The New Alternative: Truflation
Truflation is a private inflation index that uses modern data sources, such as:
real-time consumer spending
online price changes
housing and rental market data
Instead of updating monthly, Truflation updates daily, which means it often shows inflation shifting faster than CPI.
Think of it like this:
CPI is the official monthly report
Truflation is a live dashboard
The Biggest Difference: Housing
This is where real estate becomes especially important.
CPI does not measure home prices directly.
Instead, it uses something called Owners’ Equivalent Rent, which is essentially an estimate of what homeowners would pay to rent their own home.
That works reasonably well across the country, but in high-demand coastal markets like Manhattan, Hermosa, and Redondo Beach, it often misses what’s actually happening with:
home values
mortgage payments
replacement costs
Housing inflation in CPI tends to show up late, sometimes 9–18 months after the market has already moved.
That’s why people often feel like:
“Inflation is supposedly down… but housing still feels expensive.”
Both things can be true.
Why This Matters for Buyers and Sellers
Mortgage rates are still driven by CPI, because the Fed pays attention to official inflation data.
But consumer behavior — how expensive life feels right now — often reflects something closer to Truflation.
In the South Bay, where inventory remains limited, home prices don’t always fall just because inflation headlines improve.
Real estate here is driven more by:
scarcity
lifestyle demand
long-term supply constraints
The Bottom Line
Inflation data can be confusing, but here’s the key takeaway:
CPI influences interest rates.
Real-time costs influence buyer psychology.
And South Bay housing is shaped most by supply and demand — not national averages.
If you’d like to talk through what these trends mean for your home value, timing a move, or buying in 2026, I’m always happy to help.
Gary Senser
Botello & Senser | Estate Properties
310.383.2779
The lag between actual housing cost changes and CPI's Owners Equivalent Rent is such a critical insight. That 9-18 month delay means policymakers are often reacting to old data when making rate decisions, which explains why mortgage rate moves can feel so disconnected from lived experience. Reminds me of the lag issues with employment data, where revisions sometimes flip the narative months later.