Boston Fed, Report: Forecasting CPI Shelter under Falling Market-Rent Growth

“Shelter costs play an important role in price indexes. Therefore, to understand how inflation will move, it is important to consider how the price of shelter will evolve. At this moment particularly, there is uncertainty about the movement of the price of shelter. Rental prices have increased significantly in the last two years, but their growth rate has declined recently. CPI shelter tends to lag changes in market rents because the measurements of the two are staggered, and because different samples of renters are considered. Therefore, it is unclear how the substantial variation in market rents in recent years will feed into the price of shelter.”