Journal Article

Do rising rents complicate inflation assessment?

Abstract: In the face of falling house prices, decreasing rates of homeownership, and a glut of vacant homes, the Consumer Price Index?s measure of the cost of owner-occupied housing?owners? equivalent rent of residence (OER)?has begun to accelerate, rising at an annualized rate of 2.3 percent over the past six months. Given a backdrop of generally subdued underlying inflation elsewhere in the index, a persistent increase in the relative price of OER?the largest component of the consumer market basket by far?may create upward pressure on measured inflation.

Keywords: Rent; Inflation (Finance); Consumer price indexes;

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Bibliographic Information

Provider: Federal Reserve Bank of Cleveland

Part of Series: Economic Commentary

Publication Date: 2012

Issue: Feb

Order Number: 2