E Economics

5 Tweets That Suggest US Rents Will Be A Drag on Headline CPI in the Coming Months

11 June, 2023
US rents

Tracking US Rents is important for understanding the dynamics of US Inflation. The Shelter component accounts for 34.586% of the Consumer Price Index (CPI) basket, with Owners’ Equivalent Rent of Residences (OER) accounting for 25.437%. Latest data and proxies confirm that US market rents are likely to contract soon on a YoY basis. Given that the CPI’s measure of rents for homeowners has typically lagged other measures of market rents by between nine and twelve months, this component is expected to normalize downward in the coming months, adding downward pressure on headline inflation. This development was already flagged by Fed Chair Powell in November 2022.