CPI Data from BLS, chart by Mish

Month-Over-Month Details 

• The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in February on a seasonally adjusted basis, after increasing 0.5 percent in January
• The index for shelter was the largest contributor to the monthly all items increase, accounting for over 70 percent of the increase
• The food index increased 0.4 percent over the month with the food at home index rising 0.3 percent. 
• The energy index decreased 0.6 percent over the month as the natural gas and fuel oil indexes both declined. 
• The index for all items less food and energy rose 0.5 percent in February, after rising 0.4 percent in January. 
• Categories which increased in February include shelter, recreation, household furnishings and operations, and airline fares. 
• The index for used cars and trucks and the index for medical care were among those that decreased over the month. 

Hot, Warm, Cool, or Cold

Looking at this data in isolation, there is nothing one could point to that would possibly induce the Fed to do anything but accelerate the pace of rate hikes, especially given the fact the Fed ignores food and energy.

Yet, here is a headline I captured this morning: "U.S. stocks are rising after inflation data fuels hopes on lower rate hikes." 

I read the report and it was nonsense about the CPI only going up 0.4 percent when last month it rose 0.5 percent. Well, the preceding two months were 0.1 percent and 0.2 percent.

Shelter Remains Hot 

CPI Shelter Data from BLS, chart by Mish

Shelter Notes

• Shelter comprises 34.39 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 25.39 percent.

Price of Rent

The price of rent has gone up at least 0.7 percent for 9 consecutive months. Shelter has gone up at least 0.6 percent for 10 consecutive months. 

CPI Year-Over-Year

CPI Year-Over-Year Details

CPI Year-Over-Year Percent Change 

• The all items index increased 6.0 percent for the 12 months ending February. 
• The all items less food and energy index rose 5.5 percent over the last 12 months, its smallest 12-month increase since December 2021. 
• The energy index increased 5.2 percent for the 12 months ending February
• The food index increased 9.5 percent over the last year. 
• The shelter index increased 8.1 percent, the highest since June 1982. 

Has Rent Really Stabilized?

My answer In October was no, last month no, and my answer today is still no. 

Mish 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.

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. 

Note that new leases have bottomed and are heading back up. 

The stock market is up as I type, but it is about a Fed bailout of banks, not inflation data. 

More By This Author:

Banks Suffer Another Big Decline Despite The Fed's Bailout Magic
If There Are No SVB Bailouts, Will There Be Financial Armageddon?
SVB Will Not Slow Fed Interest Rate Hikes, Expect A Half Point In March