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Shelter Notes

• Rent of primary residence is measured rent.
• Owners’ Equivalent Rent (OER) is the rent a person would pay if they rented their own home in lieu of a mortgage or outright ownership.

Rent of primary residence plus OER of primary residence compromise 33.467 percent of the CPI. The combination is 91.43 percent of the shelter index group.

This is why I was a bit surprised earlier today to see shelter up 0.3 percent, with OER and Rent up 0.2 percent and insurance (another 0.4 percent of the CPI) flat for the month.

CPI Lodging Away From Home Index

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Based on limited data that only dates to 1997, the price of lodging away from home tends to take a hit during recessions, then recovers.

The Covid recovery was very rapid, then stalled. The question is where to from here.

CPI Lodging Away From Home Month-Over-Month

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Month-over-month fluctuations appear to be random noise, yet those fluctuations create the trends in the chart above.

The index peak was in March of 2023. We have not yet broken the downtrend since then.

If the lodging away from home move in November is random noise, then shelter will start getting closer to numbers that the Fed would like to see.

The CPI Rises 0.3 Percent in November

For more details on the CPI, please see The CPI Rises 0.3 Percent in November, Rate Cut Odds Jump Anyway

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