Real Rents Advance...Rent Index, Not So Much
In October, real rents recovered a small part of the ground they lost in September, according to Consumer Price Index (CPI) data. The residential rent component of the CPI advanced at a seasonally adjusted annual rate of 5.1%—the largest one-month increase in more than four years, and generally consistent with recent improvement seen in vacancy and absorption rates.
Nevertheless, the real rent index (which adjusts for inflation using the overall CPI) only managed to edge up from 106.2 to 106.4. The index was restrained by overall inflation which, although less than the growth in rents, was still significant in October, and for once was broad-based. "Core" inflation (which excludes food and energy) came in at double the rate posted in any of the previous five months, although it was still quite low on a year-over-year basis, and so remains a non-issue for the Federal Reserve as it considers monetary policy decisions.
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