Shelter Costs Rose 0.4% in September as Inflation Hit 3.7%, BLS Says
The Labor Department said Oct. 14 that its shelter index rose 0.4% in September and 3.2% from a year earlier. Rent rose 0.2% for the month, while gasoline drove much of the 0.6% overall increase.
By Aida Yousif · 3 min read
Housing costs in the Consumer Price Index rose 0.4% in September after a 0.3% gain in August, the Bureau of Labor Statistics reported at 8:30 a.m. ET on Wednesday, Oct. 14. The shelter index was up 3.2% from a year earlier.
Why this matters: Shelter is the largest part of most household budgets and the biggest single piece of the CPI. September's report showed housing costs still rising steadily even though energy prices, not rent, drove most of the jump in overall inflation.
Chart: Seasonally adjusted monthly change in the CPI shelter index, from the Oct. 14 BLS release. Chart by mortgage.news using only the figures cited in this article.
The headline numbers
Overall consumer prices rose 0.6% in September on a seasonally adjusted basis and 3.7% over the past 12 months before seasonal adjustment, up from a 3.4% annual pace in August. BLS said gasoline rose 9.1% for the month and accounted for over half of the overall increase. Prices excluding food and energy rose 0.3% for the month and 2.6% for the year.
Inside the shelter index
- Rent of primary residence: up 0.2% in September.
- Owners' equivalent rent, an estimate of what homeowners would pay to rent their own homes: up 0.3%.
- Lodging away from home, which includes hotels: up 2.0%.
The hotel component is small and moves sharply from month to month, so it pushed the shelter total above the rent figures this time. Rent itself rose at a modest pace.
Shelter monthly gains this year ranged from 0.1% in June and July to 0.6% in April, according to the BLS table, so September sits in the middle of that range rather than marking a new trend.
Why the CPI rent figure lags
The CPI measures rents that all tenants pay, including those on existing leases, not just new asking rents on vacant units. That makes it slow to reflect changes in the rental market. Private trackers report softer numbers; Apartment List put national rent growth at -0.4% from a year earlier in September, so the CPI figure and listing data can point in different directions at the same time.
Why borrowers are watching
A hotter-than-expected inflation report can push Treasury yields higher, and mortgage rates often move in the same direction as long-term yields, though not one for one. This report is the last full inflation reading before the Federal Reserve's Oct. 27 and 28 meeting. What the Fed decides there is not known in advance.
What it means
For renters, the report shows rent increases continuing at a slower pace than overall inflation. For homeowners, higher owners' equivalent rent does not change a fixed mortgage payment, but insurance, taxes and utilities can still rise. For buyers, inflation news matters mostly through its effect on rates.
The takeaway: Energy drove September's inflation jump, while housing costs kept rising at a steady pace that is higher than many households would like.