Rent prices conceal better U.S. inflation picture

Homes for sale in Washington
A "For Rent, For Sale" sign is seen outside of a home in Washington, U.S., July 7, 2022. REUTERS/Sarah Silbiger

WASHINGTON, Dec 13 (Reuters Breakingviews) - The U.S. battle against inflation is faring even better than its own data suggest. The country’s Consumer Price Index rose just 0.1% in November, the Bureau of Labor Statistics reported on Tuesday. Economists polled by Reuters expected a 0.3% gain.

Rising housing costs were “by far” the biggest driver of the increase, the agency said. Yet a lag between market trends and CPI data means that true inflation is lower than the government’s reading.

The shelter component in CPI is collected through a rolling monthly survey. As new leases are added, they become part of a moving average. It can take several months for CPI to reflect changes in the rental market.

According to the government’s measure, shelter prices rose 0.7% last month, but Zillow’s (ZG.O)gauge of nationwide rent prices fell for a second consecutive month in November, by 0.4%. Once CPI catches up, the inflation picture is going to look much more encouraging. (By Ben Winck)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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Editing by Francesco Guerrera and Sharon Lam

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