{"id":57081,"date":"2021-03-13T09:40:27","date_gmt":"2021-03-13T14:40:27","guid":{"rendered":"https:\/\/olduvai.ca\/?p=57081"},"modified":"2021-03-13T09:40:27","modified_gmt":"2021-03-13T14:40:27","slug":"house-price-inflation-in-cpi-is-of-course-complete-baloney-but-it-accounts-for-1-4-of-total-cpi","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=57081","title":{"rendered":"House Price Inflation in CPI is of Course Complete Baloney, but it Accounts for 1\/4 of Total CPI"},"content":{"rendered":"
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House Price Inflation in CPI is of Course Complete Baloney, but it Accounts for 1\/4 of Total CPI<\/a><\/h3>\n<\/header>\n
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With actual house price inflation based on market data, overall CPI would have jumped by 3.7%. Lifting the cover on the deception to keep CPI low.<\/strong><\/p>\n

For most Americans, housing costs are the largest item in their budget, ranging from 30% to 60% of their total monthly spending. In its Consumer Price Index (CPI) for February, released yesterday, the\u00a0Bureau of Labor Statistics<\/a>\u00a0reported that the costs of homeownership (which the BLS calls \u201cOwner\u2019s equivalent rent of residence\u201d) have increased by just 2.0% from a year ago, and that rents (\u201crent of primary residence\u201d) have increased by 2.0%. They\u2019re the biggest items among the 211 items in the CPI basket and together account for about one-third of overall CPI. They play a huge role in CPI. So\u2026<\/p>\n

Rent inflation of 2.0% year-over-year on average across the US might be roughly on target,\u00a0from what I can see in other rental data<\/a>. But homeowner\u2019s inflation of just 2.0%, given the skyrocketing home prices? Ludicrous. In its latest release, the Case-Shiller National Home Price index jumped by 10.4%.<\/p>\n

This discrepancy between home price increases and the CPI for homeowners \u2013 which has for years contributed to understating the overall CPI \u2013 is depicted in the chart of the Case-Shiller National Home Price Index (red line) and the CPI for \u201cowner\u2019s equivalent rent of residence\u201d (black line). I set the homeowners CPI at 100 for January 2000 to match the Case-Shiller index, which is set by default at 100 for January 2000. This allows you to see the progression of both indices on the same axis.<\/p>\n

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The thus corrected CPI increases by 3.7%.<\/strong><\/div>\n<\/div>\n<\/div>\n

The \u201cowner\u2019s equivalent rent of residence\u201d accounts for 24.2% of CPI. If it had increased by 10.4%, in line with the Case-Shiller index, instead of 2.0%, the overall CPI would have increased by 2.03 percentage points\u00a0more<\/u>…<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n

wolfstreet, wolf richter, cpi, consumer price inflation, house prices, inflation, statistical manipulation, statistics,<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

House Price Inflation in CPI is of Course Complete Baloney, but it Accounts for 1\/4 of Total CPI With actual house price inflation based on market data, overall CPI would have jumped by 3.7%. Lifting the cover on the deception to keep CPI low. For most Americans, housing costs are the largest item in their […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[15374,172,2694,426,1056,2084,4254,4255],"class_list":["post-57081","post","type-post","status-publish","format-standard","hentry","category-economics","tag-consumer-price-inflation","tag-cpi","tag-house-prices","tag-inflation","tag-statistical-manipulation","tag-statistics","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57081","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=57081"}],"version-history":[{"count":0,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/57081\/revisions"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=57081"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=57081"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=57081"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}