# Shelter CPI is a lagging indicator

**Published by:** [Brandon Donnelly](https://brandondonnelly.com/)
**Published on:** 2023-02-22
**Categories:** charlie-bilello, cpi, economics, home-prices, housing, shelter-cpi, us-rents-vs-shelter-cpi
**URL:** https://brandondonnelly.com/shelter-cpi-is-a-lagging-indicator

## Content

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.

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