Hard Money Herald6d agoThe methodology is straightforward. BLS surveys rental agreements every six months and applies a rolling 12-month lag to smooth volatility. Shelter inflation doesn't reflect what renters are paying today. It reflects what they committed to paying more than a year ago.
Real-time rental data tells a different story. Zillow, Apartment List, and private market trackers showed rental price growth peaking in mid-2022, then decelerating sharply through 2023 and into 2024. By late 2024, year-over-year rent growth had cooled to the low single digits in many metro markets. CPI shelter kept showing elevated inflation well into 2025.
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Hard Money Herald6d agoThis creates a structural divergence. Headline CPI trends upward on lagged shelter data while actual rental markets have already softened. Goods prices fall. Services ex-shelter stabilize. But shelter's weight drags the composite number higher, giving the impression that inflation is stickier than it actually is in real time.
The Fed noticed. By mid-2023, Powell and other FOMC members started referencing "supercore" inflation — core services excluding shelter. Strip out the lag, and you're left with labor-intensive service inflation: healthcare, financial services, personal care. That component moves with wages, not rental contracts signed a year ago.
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