Rents Are Pretty Much the Only Prices Going Up

Article originally posted on on January 22, 2016

Fast-rising housing costs may explain a divergence among U.S. inflation gauge

Wall Street Journal staffer Ben Leubsdorf breaks down the make-up and trends of the three respective measures and indicators of inflation–the Producer Price Index, the Consumer Price Index, and the Personal-Consumption expenditures index–and the PPI’s recent renegade behavior. Leubsdorf writes:

The cost of shelter, as measured by the CPI, rose 3.2% in November from a year earlier for the third consecutive month—the fastest growth in eight years. But while rent (and its equivalent for homeowners) makes up nearly a third of the CPI basket and a smaller but still substantial share of the PCE index, it’s absent from the PPI. That may explain why the path for PPI looks a lot like the path of CPI if you exclude shelter costs from the latter index.