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US OUTLOOK/OPINION: Fed Staff See Rent Inflation Above Norm Until Mid-2026

US OUTLOOK/OPINION
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  • Cleveland Fed economists write that “Our baseline forecast implies that CPI rent inflation will remain above its prepandemic norm of about 3.5 percent until mid-2026. Our alternative forecasts highlight both upside and downside risks to this forecast.”
  • https://www.clevelandfed.org/publications/economic-commentary/2024/ec-202417-new-tenant-rent-passthrough-and-future-of-rent-inflation
  • As we noted in the Inflation Insight after last week’s inflation releases, the weighted average of CPI OER and primary rents cooled from a particularly hot 0.47% M/M in August but at 0.32% M/M in September it’s still above the 0.27% M/M averaged pre-pandemic. There has only been one month this cycle consistent with this pre-pandemic pace, with exactly 0.27% in June. That puts more onus on other services or core goods inflation to moderate to below average rates.
Source: Cleveland Fed
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  • Cleveland Fed economists write that “Our baseline forecast implies that CPI rent inflation will remain above its prepandemic norm of about 3.5 percent until mid-2026. Our alternative forecasts highlight both upside and downside risks to this forecast.”
  • https://www.clevelandfed.org/publications/economic-commentary/2024/ec-202417-new-tenant-rent-passthrough-and-future-of-rent-inflation
  • As we noted in the Inflation Insight after last week’s inflation releases, the weighted average of CPI OER and primary rents cooled from a particularly hot 0.47% M/M in August but at 0.32% M/M in September it’s still above the 0.27% M/M averaged pre-pandemic. There has only been one month this cycle consistent with this pre-pandemic pace, with exactly 0.27% in June. That puts more onus on other services or core goods inflation to moderate to below average rates.
Source: Cleveland Fed