CPI Propped Up by Lagging Housing Data

Back in June I posted Vertical Home Price Move Ending. Shelter is 32 percent of the CPI. Owner's equivalent rent (OER), a fabrication created by the BLS to replace home prices, is 23 percent of the CPI or 72 percent of the shelter component. Since shelter was up 0.5 percent in July, it was 0.16 percent of the CPI reading. Home prices peaked in May though and have begun falling. Eventually, OER will slide as well, but it could still take some time.