Real Rents Nearly Flat, but Still Ahead of Inflation
In February, the Real Rent Index continued along its nearly flat trend line, as the rate of increase in the residential rent component of the Consumer Price Index (CPI) slowed, but still managed to come in narrowly ahead of the pace of overall inflation. After four consecutive months of (seasonally adjusted annual) rates over 4%, growth of the CPI sub-index measuring rents in primary residences slowed to 2.3%.

Meanwhile, growth of the overall CPI  slowed to a near standstill, increasing at a rate of only 0.3%, the smallest one-month increase by far since August. The combination caused the real rent index to move up, but only from 108.8 to 108.9. In addition to serving as the denominator of the real rent index, the behavior of the overall CPI is of interest in the current environment, when markets are looking to the Federal Reserve  to stimulate the economy by lowering interest rates. The Fed typically feels it has more freedom to do this when inflation is low.

Based on seasonally adjusted Consumer Price Indices; U.S. Department of Labor, Bureau of Labor Statistics. The annual rates indicate what the percentage change would be if the current monthly rate were sustained over a 12-month period.The real rent index is the CPI for rent of primary residence divided by the CPI for all items and scaled so that January 1995 is 100.

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