Inflation soared in May, with the CPI-U all-items index increasing 8.6% for the 12 months ranging from May 2021 to May 2022 — the largest 12-month increase since Dec. 1981, according to the Consumer Price Index (CPI) data released June 10. While the increase was broad-based, it’s notable that a key essential — shelter — increased in cost by 5.5% over the past year, the largest 12-month increase for that category since the period ending Feb. 1991, according to Bureau of Labor Statistics (BLS) data.

                By                    Yaёl Bizouati-Kennedy

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Indeed, the shelter index increased 0.6% in May, which represents the largest monthly increase since March 2004, according to the BLS. Meanwhile, the rent index rose 0.6% over the month, the same increase as in April, and the owners’ equivalent rent index also rose 0.6%.

Rent Increases Show No Sign of Slowing

Vanneman added that while higher food and energy prices are easy pain points to identify, housing rents — for both tenants and the rental value of owner-occupied homes — are still moving sharply higher.

“In short, expect rents to be a key inflationary factor for the remainder of this year and into the next as rents make up more than 30% of the overall CPI,” he said. “First, rents follow housing prices with a lag. Since COVID started, housing prices are up more than 30%. Rents, however, are not just asset driven. They are also income driven and since wage income is still rising rapidly, it’s not likely rents will slow very much soon,” he added.

And it’s not only primary residences which saw their prices skyrocket. The index for lodging away from home also rose 0.9% in May after larger increases in recent months. Over the year, the index rose a staggering 19.3%, according to BLS data.

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