Not So Fast with the CPI Celebrations: Rents Are Surging Again and Back to Record Highs

August 14, 2023

Last week’s CPI report was surprisingly dovish because, as we have discussed extensively in the past two years, rent inflation – which is the biggest variable in the CPI’s biggest category (shelter) – has turned, and is now decelerating sharply. Recall that it was two years ago when we first warned that contrary to CPI report’s subdued and badly lagging prints, rental inflation when observed using real-time indicators such as Apartment List, Zillow or Real Page – was soaring out of control…

[…] … and would feed through into the inflation report in 9-12 months… which it did right on schedule, at which point the market freaked out earlier this year just as expected, even though as we showed half a year ago using real-time metrics, rent inflation had actually topped out in late 2022.