Journal Article

A Tight Labor Market Could Keep Rent Inflation Elevated

Abstract: Rent inflation responds more to labor market conditions compared with other components of inflation. We attribute this link between labor market tightness and rent inflation to greater demand for rental units afforded by job gains and wage growth. Although online measures of asking rents currently suggest official measures of rent inflation will decline, we caution that rent inflation is likely to remain above pre-pandemic levels so long as the labor market remains tight.

Keywords: rent inflation; labor market; inflation;

JEL Classification: E30; R20; R31;

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Bibliographic Information

Provider: Federal Reserve Bank of Kansas City

Part of Series: Economic Bulletin

Publication Date: 2023-03-01

Issue: March 1st, 2023

Pages: 4