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Comparing Measures of Rental Prices Can Inform Monetary Policy

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  • Peter McAdam

Abstract

Shelter makes up one-third of the Consumer Price Index (CPI) and is important to understanding inflation developments. Comparing two measures of shelter prices—the official U.S. Bureau of Labor Statistics (BLS) dataset and the Zillow rental price index—shows that the Zillow series leads the BLS series by about six to 10 months. Changes in the Zillow series should eventually be reflected in the BLS data, so any positive gap between the two suggests that tighter monetary conditions may be needed to lower CPI inflation.

Suggested Citation

  • Peter McAdam, 2023. "Comparing Measures of Rental Prices Can Inform Monetary Policy," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, September.
    • Handle: RePEc:fip:fedkeb:97091
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    References listed on IDEAS

    as
    1. Brent Bundick & A. Lee Smith, 2020. "The Dynamic Effects of Forward Guidance Shocks," The Review of Economics and Statistics, MIT Press, vol. 102(5), pages 946-965, December.
    2. Brent Bundick & Andrew Lee Smith, 2023. "A Tight Labor Market Could Keep Rent Inflation Elevated," Economic Bulletin, Federal Reserve Bank of Kansas City, issue March 1st, pages 1-4, March.
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    Cited by:

    1. N. Kundan Kishor, 2024. "Does the Zillow rent measure help predict CPI rent inflation?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 59(4), pages 220-226, October.

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