The US Bureau of Labor Statistics has been underneath some hearth for quirks within the January shopper value index report, notably the shelter part and the way some uncommon modifications boosted it.
Officers there in the present day held a lunchtime presentation on the report and the lease and homeowners’ equal lease elements particularly. This slide will get to the guts of the matter.
US inflation much less shelter is working at 1.5% y/y, underneath the Fed’s goal.
Within the January report, there was an enormous divergence between lease and homeowners’ equal lease.
The BLS highlighted why the measures would possibly diverge.
There’s additionally the case of the mysterious email that went out last week that was later withdrawn. It mentioned:
The weights for single household indifferent properties elevated materially
from December 2023 to January 2024. All of you trying to find the supply
of the divergence have discovered it
The divergence appeared to come back from OER unit-level weights.
That skew appeared to come back from single-family indifferent items which had been re-benchmarked to a 50% weighing from the low 40s this 12 months and 35% the 12 months earlier than.
The massive query is whether or not the skew will persist into February and past. There wasn’t actually any readability there with officers highlighting how vital sampling can be and the way troublesome it’s to seek out renters in high-income single-family house areas.
That is all fairly deep into the weeds for me however Parker Ross does an admirable job trying to sort it out.
