# Shelter CPI is a lagging indicator

By [Brandon Donnelly](https://brandondonnelly.com) · 2023-02-22

charlie-bilello, cpi, economics, home-prices, housing, shelter-cpi, us-rents-vs-shelter-cpi

---

[Charlie Bilello](https://twitter.com/charliebilello) shared this interesting housing chart in his weekly newsletter:

![](https://storage.googleapis.com/papyrus_images/f6a0393edde4bd27149292ab069f22cd.png)

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](https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.htm) -- 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](https://seekingalpha.com/article/4555879-shelter-inflation-driving-with-the-rearview-mirror) 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.

---

*Originally published on [Brandon Donnelly](https://brandondonnelly.com/shelter-cpi-is-a-lagging-indicator)*