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Inflation: 'Stubbornly high' for home furnishings, says expert

This week’s inflation print showed stickiness in a category surprising to some forecasters — home furnishings and supplies.

"That's a very bizarre dynamic," Omair Sharif of Inflation Insights told Yahoo Finance.

The sector, which measures consumer prices for furniture and goods for the home, rose by 1.1% on a month-over-month basis.

“Prices of furniture should be coming off very appreciatively,” said Sharif. The category "has remained stubbornly high.”

Sharif said forecasters expected home furniture and supplies to turn negative after some big box retailers have been reporting high inventory levels.

“You would’ve thought that by now, three months after they’ve been telling you ‘Hey our inventories are too big,’ that this would have led to price declines and that just hasn’t happened,” he noted.

Sharif said this may be happening for one of two reasons. Either the Bureau of Labor Statistics isn’t capturing the right data samples, or retailers aren’t cutting their prices that much.

Sharif believes the latter scenario is more likely.

“They’re [retailers] telling you they’re discounting but it’s not really happening. At least not to the extent that they have kind of made it out to be in their [earnings] calls.”

“It’s not something that has shown up in the CPI data at all,” said Sharif. “I think it’s getting to the point where you have to ask yourself, 'Is it going to show up at all?”

“It may just be that, this is some sort of impact of — basically the entire cost structure of your business has increased,” he added.

High-end furniture retailer RH (RH) has defended its decision to not lower prices in order to protect margins — despite forecasting a 'softening' market.

"If we hit the promotional button here, our sales will go up 50 times easily," said Gary Friedman, chairman and CEO of RH during the company's latest earnings call. "[It's] just not the game we're playing," he added.

The Consumer Price Index (CPI) in August showed an increase of 8.3% over last year and a 0.1% rise from the prior month. Economists had expected prices to go up by 8.1% over last year and fall 0.1% from July.

On a "core" basis, which excludes food and energy, prices rose 6.3% over last year and 0.6% over the prior month in August.

Ines is a markets reporter covering stocks from the floor of the New York Stock Exchange. Follow her on Twitter at @ines_ferre

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