Rents Inch Upward
 In December, the Real Rent Index (which adjusts changes in residential rents for overall inflation) inched up by one tenth of a point, from 109.0 to 109.1. During the month, the residential rent component of the Consumer Price Index (CPI) increased at a seasonally adjusted annual rate of 4.4%. This is a relatively healthy nominal increase in rents, and is in line with the average monthly increases we've seen over the past year.

Also in December, the overall CPI advanced at a rate of 3.4%, slightly below the rate of increase in residential rents. When rents increase faster than prices, the real rent index goes up. On a year-over-year basis, both the overall CPI and its residential rent component increased by roughly 4% in December. Inflation indicators are particularly important at the present time, when they may be constraining how far the Federal Reserve feels it is prudent  to lower interest rates in order to stimulate the economy and avoid recession.

Based on seasonally adjusted Consumer Price Indices; U.S. Department of Labor, Bureau of Labor Statistics. The annual rates indicate what the percentage change would be if the current monthly rate were sustained over a 12-month period. The real rent index is the CPI for rent of primary residence divided by the CPI for all items and scaled so that January 1995 is 100. [ return to top ]