Economics and markets

U.S. shelter costs, a source of inflation pressure, will ease

November 30, 2022

The Fed’s rate-hiking cycle approaches its end
The role of shelter in 'sticky' U.S. inflation
A slower housing market now, reduced inflationary pressure 'tomorrow'

Both traditional and alternative data suggest a slowdown in shelter inflation only after mid- to late 2023, keeping core inflation elevated at year-end 2023

A line graph shows changes in the rolling three-month average of OER—homeowners’ equivalent of rent—fluctuating in a range between roughly –0.2 percent and 0.6 percent over the last 20 years. The graph also shows two Vanguard estimates of monthly changes in OER. An estimate based on traditional indicators fluctuates in a range between roughly zero and 0.4 percent, while an estimate based on alternative indicators fluctuates in a range between roughly –1 percent and 2 percent.
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