Inflation came in hotter than expected in January, and there’s still uncertainty about whether that was a fluke or if price hikes are becoming stickier. But one key part of the inflation picture—rent—may already look far worse than things really are, The Washington Post reports.
The cost of rent has been driving inflation for months, at least in the way data shows up in official inflation reports. The Federal Reserve has pushed its baseline interest rate to the highest level in decades, and prices in most other areas are moderating. Why rent hasn’t followed suit has been a bit of a mystery.
Almost every data source shows that rent costs are actually cooling significantly, though.
New data shows that rents fell for six consecutive months before ticking up slightly in February. Costs on leases are down 1% compared with a year ago, with more than half of the nation’s largest cities seeing drops. Hundreds of thousands of new homes have come on the market, boosting supply after years of shortages. Demand has also settled down as tenants stay put more than they did during the COVID-19 pandemic.
But these shifts aren’t showing up much, if at all, in official inflation reports. Experts and policymakers are still scratching their heads as to why.
