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Report
The measurement of rent inflation
Shelter represents a large portion of the typical household budget. Accordingly, rent, paid either to a landlord or to oneself as an owner-occupant, has a large weight in the CPI and the PCE deflator. Nonetheless, the way in which rent inflation is measured is not widely understood. In this paper, we describe how the Bureau of Labor Statistics estimates tenant rent and owners? equivalent rent (OER) inflation. We then estimate alternative tenant rent and OER inflation rates based on American Housing Survey (AHS) data, following BLS methodology as closely as possible. Our alternative tenant ...
Journal Article
Comparing Measures of Rental Prices Can Inform Monetary Policy
Shelter makes up one-third of the Consumer Price Index (CPI) and is important to understanding inflation developments. Comparing two measures of shelter prices—the official U.S. Bureau of Labor Statistics (BLS) dataset and the Zillow rental price index—shows that the Zillow series leads the BLS series by about six to 10 months. Changes in the Zillow series should eventually be reflected in the BLS data, so any positive gap between the two suggests that tighter monetary conditions may be needed to lower CPI inflation.