Core CPI ex-Shelter declines to 3.9% YoY

The good news is that inflation has clearly peaked. And since rents are falling faster than seasonally normal - due to the pandemic related changes in household formation - it makes sense for the short term to use core CPI ex-shelter. 

NOTE: There was a surge in household formation during the pandemic, pushing up rents sharply, and now household formation has slowed sharply just as more supply will be coming on the market.

Click on graph for larger image.

This graph shows the year-over-year change in Core CPI ex-Shelter (blue), and the one month change annualized (red). The year-over-year change was at 3.9% in January, down from 4.5% in December.

Core CPI ex-Shelter has increased at a 1.3% annual rate over the last four months.