The Bureau of Labor Statistics reported on Thursday that the Consumer Price Index was up 0.2 percent in May compared with April, and up 1 percent compared with a year earlier. That doesn’t seem like much inflation, but the gyrations in the price of energy have tended to distort the picture.
Over the last year, food prices have increased 0.7 percent, while energy prices have dropped a precipitous 10.1 percent. Without food or energy—what’s known as the “core” rate of inflation—the rise year-over-year came in at 2.2 percent. The core rate of inflation on an annual basis has been creeping upward for more than a year now. As recently as last October, it was still less than 2 percent.
Tucked away in the BLS report is data on rents. Rents, which have been rising steadily since the worst of the recession ended, are still rising robustly. For the month of May, rents were up 0.4 percent. For the year, they were up 3.8 percent, the highest annual increase since 2008.
Rents are being driven by still-strong demand and still-weak supply, except in some major markets that have seen a lot of upper-end apartment development. Moreover, rent increases continue to outstrip income increases. According to the BLS, wages increased 1.4 percent in the 12 months ending in May.