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February's Consumer Price Index (CPI) report saw inflation rise by 0.2% month-over-month and 2.8% year-over-year, as published by the US Bureau of Labor Statistics (BLS), just below economist expectations of 0.3% monthly and 2.9% annual gains. What does this all mean for shelter inflation and housing costs?
Yahoo Finance senior housing reporter Dani Romero comes on Wealth to break down how shelter prices rose 0.3% monthly and 4.2% annually in February, both below economists' expectations, while also examining rent price trends.
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Shelter inflation showing signs of easing in the February CPI report. Our very own Danny Romero going to break down the numbers for us. Danny.
Brad, shelter remains on the disinflationary path. So, let's take a look at these numbers. The government data showed that shelter costs rose 4.2% on an annual basis. That is the slowest pace in over three years. Now, on a monthly basis, housing costs ticked up by 0.3% last month. Now, it's very important to note that the housing component accounted for nearly half of February's overall monthly increase. Remember, there are two components that economists pay very, very close attention to and hold the biggest weight in the shelter figure. That's owner's equivalent rent, OER. That's the hypothetical rent you would earn if you were a homeowner renting out your property. OER came in at 0.3% gain last month, and rent, which lags real-time data because the government collects rent data every six months, which causes a lag in the index, rents rose 0.3% in February. Now, looking ahead, some economists believe that rent growth will move lower this year, pressured by stricter immigration rules and tariffs impacting construction, Brad.
Danny, thanks so much for breaking this down for us. Appreciate it.