(Bloomberg) — A measure of rents in the US posted the biggest monthly increase in three decades, underscoring the increasingly high cost of living to contribute even more to inflation this year.
The primary residence rent index, released Thursday, rose 0.6% in February from the previous month, the highest since 1987, according to data from the Bureau of Labor Statistics. This was part of an acceleration in the broader shelter category, which accounted for more than 40% of the monthly increase in the consumer price index excluding food and energy.
Fares, which have been rising in the US over the past year, are reported with gaps in the CPI report. This means they will contribute even more to inflation going forward, which was already at a 40-year high in February. Prices are set to climb further as Russia’s invasion of Ukraine disrupts supply chains and disrupts the availability of key commodities, including oil.
tailwind inflation
Sarah House, senior economist at Wells Fargo & Company, said of rent prices, “there’s more strength to be seen.” “We don’t expect that to peak until the third quarter of this year.”
Rents are rising especially in major cities like New York and Atlanta where landlords are gaining bargaining power after the early days of the pandemic. Nationwide, they are growing at a more modest rate, but the jump is still painful for many Americans whose wage benefits are failing to keep up with inflation.
The data also showed how much Americans are paying for basic things like food and gasoline. Those items, along with the shelter, pushed up prices overall in February.
– With assistance from Olivia Rockman and Vince Gole.
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