Charlie Bilello shared this interesting housing chart in his weekly newsletter:
Shelter is one of the largest components of the CPI index (about a third). And at 7.9% (see above), this is the highest rate of housing inflation since 1982. However, the shelter component -- which is largely a combination of rent on a primary residences and the implicit rent that owner occupants would pay if they were renting their homes -- has historically been a lagging indicator. Apparently it has something to do with the way that it's calculated. So for this reason, the shelter CPI has only increased 14.9% since the start of 2020, whereas home prices nationally increased by about 40% and rents increased by about 20%. It's also why there appears to be a disconnect (in the above chart) with rents. All of this is to say that we might see shelter jump up a bit further as it continues to record what happened over the last few years.
The latest US consumer price index report was recently published and for the 12-month period ending December 2021, the all items index rose 7.0%. This is the largest 12-month increase since June 1982. Here's a breakdown:
Gasoline (all types): +49.6%
Used cars and truck: +37.3%
Meats/fish/poultry/eggs: +12.5%
New cars: +11.8%
Food at home: +6.5%
Electricity: +6.3%
Food away from home: +6.0%
Apparel: +5.8%
Transportation: +4.2%
Shelter: +4.1%
The obvious standouts here are the price of gasoline and the price of used cars and trucks. Too much demand and not enough supply, it would seem. But the other conspicuous line item for me is shelter at only 4.1%. Is that it?