Posted 3/7/2024, 11:19:05 AM
OER Weighs on Inflation Outlook as Estimates Diverge from Rent Reality
- OER (owners' equivalent rent) accounts for 25% of CPI but is tricky to estimate accurately due to limited data
- OER rose much more than market rents in January, contributing to higher-than-expected inflation
- Increase partly due to methodology changes giving more weight to detached single-family homes
- Divergence between OER and rent inflation likely to persist, adding upward pressure on inflation
- Sticky OER inflation may deter Fed from cutting interest rates soon