Will Rising Rents Push Up Future Inflation?

Lansing, Kevin J.; Oliveira, Luiz E.; Shapiro, Adam Hale

Journal Article

Will Rising Rents Push Up Future Inflation?

Abstract: Rising rents account for a significant portion of recent inflation. Estimates of how rent inflation typically responds to two leading indicators—current asking rents and current house prices—can help forecast the path of overall inflation for the next two years. This method predicts that higher rent inflation could add about 0.5 percentage point to personal consumption expenditures price inflation for both 2022 and 2023. These potential additions are important in light of the Federal Reserve’s 2% inflation target.