CPI data from the BLS chart by Mish

Please consider the BLS CPI Report for April 2023.

Month-Over-Month Details

• The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in April on a seasonally adjusted basis, after increasing 0.1 percent in March. 
• The index for shelter was the largest contributor to the monthly all items increase, followed by increases in the index for used cars and trucks and the index for gasoline.
• The increase in the gasoline index more than offset declines in other energy component indexes, and the energy index rose 0.6 percent in April. 
• The food index was unchanged in April, as it was in March. The index for food at home fell 0.2 percent over the month while the index for food away from home rose 0.4 percent.
• The index for all items less food and energy rose 0.4 percent in April, as it did in March. 
• Indexes which increased in April include shelter, used cars and trucks, motor vehicle insurance, recreation, household furnishings and operations, and personal care. 
• The index for airline fares and the index for new vehicles were among those that decreased over the month.

CPI Year-Over-Year

Year-Over-Year Details

• The all items index increased 4.9 percent for the 12 months ending April; this was the smallest 12-month increase since the period ending April 2021. 
• The all items less food and energy index rose 5.5 percent over the last 12 months. 
• The energy index decreased 5.1 percent for the 12 months ending April.
• The food index increased 7.7 percent over the last year. 
• The all items less food and energy index rose 5.6 percent over the last 12 months.
• The shelter index is up 7.5 percent over the last year.

CPI Shelter Remains Hot, Just Not as Hot

Shelter Notes

• Shelter comprises 34.59 percent of the CPI
• Rent of primary residence is standard rent (not owner occupied), unfurnished without utilities.
• Owners' Equivalent Rent (OER), is the estimated price one would pay to rent one's own house, unfurnished and without utilities. It is the single largest CPI component at 25.44 percent.
• The shelter index increased 8.1 percent over the last year, accounting for over 60 percent of the total increase in all items less food and energy.

Price of Shelter

For March, I noted that shelter rose at least 0.5 percent for 14 consecutive months dating to January 2022. 

This month, shelter broke the string rising 0.4 percent, still a very hefty number for a Fed struggling to tame the CPI.

Most analysts have been expecting the price of shelter to come down. I have not been in that camp and still are not, although we are getting closer to smaller increases.

Mish Shelter Flashbacks

• Oct 31, 2022: Rent Prices Have Declined Two Straight Months, But What Does It Mean? Rent prices are declining month-over-month but don't read too much about inflation into the decline.
• December 8, 2022: Ignore the Pundits, Don't Expect Big Declines in the Price of Rent. The price of rent appears to be falling rapidly. But some of that is seasonal, the rest is likely a mirage.
• January 5, 2023: National Rent Prices Decline Again, But Reports Are Very Misleading. Apartment List reports the fourth consecutive drop in apartment rent prices but that may not translate to your next lease.
• February 2, 2023: National Rent Prices for New Leases Drop for the 5th Month. The price on new apartment leasers declines again, but when do existing renters get a break?
• On March 7 I asked The Fed Chair Puts a Spotlight on Rent, Has Rent Really Stabilized?We can easily see the answer is still no judging from another 0.8 percent rise month-over-month in the shelter index in February and another 0.6 percent in March.

False Dawns

National Rent Price data from Apartment List, CPI data from the BLS, chart by Mish

All these "rent is declining" false dawns have been wrong for three reasons.

1. They are based on new leases, not existing leases.
2. They report increases all at once whereas the BLS smooths things out over a 12-month period due to the fact that not all leases renew in the same month.
3. Seasonality

In the months ahead we may finally see rents ease due to the fact there are a record number of apartments under construction. Just don't expect to see declines.

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