Jay Parsons: Shelter component of CPI is defined differently today than in 1970s for more stability

Jay Parsons: Shelter component of CPI is defined differently today than in 1970s for more stability
Shelter definition in CPI has changed

Shelter, which accounts for one-third of the Consumer Price Index (CPI), is now defined differently than it was in the 1970s. Jay Parsons highlights that the current methodology aims to make shelter's impact on inflation data more stable, predictable, and lagged compared to its past formulation.

This change is important for understanding CPI trends over time and how inflation readings may be influenced by shelter costs as measured in the U.S. economy.

Parsons recently reported that Radix apartment data shows a slower start to spring leasing compared to last year, with more data expected soon. He also noted that rising rental supply has pushed single-family rent growth to its lowest point in a decade. The latest shelter methodology changes may affect how trends like these appear in official inflation statistics.

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