The Bureau of Labor Statistics (BLS) reported the Consumer Price Index (CPI) rose in January. The CPI rose at a seasonally adjusted annual rate of 6.8% in January, a big jump from the 3.1% in December. Excluding the volatile food and energy components, “core” CPI increased at a seasonally adjusted annual rate of 3.8%, faster than the 2.7% in December.

The price index for a broad set of energy sources rose at a seasonally adjusted annual rate of 59.6%. The jump in energy prices accounted for most of the increase in overall prices. Increases in the prices of apparel and new vehicles also contributed to the increase in overall prices.

NAHB constructs a “real” rent index to indicate whether inflation in rents is faster or slower than overall inflation. It provides insight into the supply and demand conditions for rental housing. When inflation in rents is rising faster (slower) than overall inflation, the real rent index rises (declines). The real rent index is calculated by dividing the price index for rent by the core CPI (to exclude the volatile food and energy components).

After declines during the recession, inflation in real rents accelerated from 2012 to 2014, a period of strong recovery in the multifamily sector, reaching a peak average annual rate of 1.7% in 2014. In 2015, real rent inflation slowed down slightly, averaging 1.6%. In January of 2017, the real rent index decreased at a seasonally adjusted annual rate of 0.5%, following the 1.5% increase in December.

Tags: core cpi, cpi, energy prices, headline inflation, multifamily, real rent index