Consumer Price Index: Rental Inflation Has Slowed Sharply Since the Pandemic

December 10, 2020

(This is a compilation of Dean Baker’s quick-take analysis over Twitter. Follow @DeanBaker13 on Twitter to get his quick-take analysis of government data immediately upon release.)

  • Overall and core CPI both rose 0.2 percent in November. Overall CPI is up 1.2 percent year-over-year. Core CPI is up 1.6 percent year-over-year. 
  • Store bought food prices fell by 0.3 percent, while restaurant food rose 0.1 percent. Year-over-year increases are 3.6 percent and 3.8 percent, respectively. (Store bought food prices rose rapidly in the shutdown period).
  • Prices of medical care services fell for the second consecutive month: down 0.1 percent, but up 3.2 percent year-over-year. Health care insurance prices went down 1.0 percent in November, and are down 3.7 percent in the last three months.
  • Hotel prices went up 4.5 percent in November, but are still down 10.8 percent year-over-year. This sector was hard hit by the pandemic. Airfares rose 3.5 percent after a 6.3 percent rise in October, but are still down 17.0 percent year-over-year.
  • Car insurance prices were up 1.1 percent in November, but still down 6.0 percent year-over-year due to people driving less. (This is a gross measure that looks at premiums, and doesn’t look at net payouts.) Used car prices fell 1.3 percent in November, but are up 10.9 percent year-over-year.
  • Clothes prices went up 0.9 percent in November, but are down 5.2 percent year-over-year. Prices for men’s suits are down 21.4 percent year-over-year, and women’s dresses down 13.5 percent year-over-year.
  • Rent proper and owners’ equivalent rent were both flat in November, up just 2.4 percent and 2.3 percent year-over-year, respectively.
  • Rent in the NYC metro area has risen at just a 1.1 percent annual rate when comparing the last three months (September, October, November) with prior three months (June, July, August).

Rental inflation has slowed sharply since the pandemic, especially in high-priced areas like NYC. If this trend continues, as seems likely, we will be looking at a very different housing picture in the post-pandemic world. 



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