PCE Measure of Shelter Decreases to 4.5% YoY in January

Here is a graph of the year-over-year change in shelter from the CPI report and housing from the PCE report this morning, both through January 2025.

CPI Shelter was up 4.4% year-over-year in January, down from 4.6% in December, and down from the cycle peak of 8.2% in March 2023.

Housing (PCE) was up 4.5% YoY in January, down from 4.7% in December and down from the cycle peak of 8.3% in April 2023.

Since asking rents are mostly flat year-over-year, these measures will slowly continue to decline over the next year as rents for existing tenants continue to increase.

The second graph shows PCE prices, Core PCE prices and Core ex-housing over the last 3 months (annualized):

Key measures are slightly above the Fed's target on a 3-month basis. Note: There is possibly some residual seasonality distorting PCE prices in Q1, especially in January.

3-month annualized change:

PCE Price Index: 2.9%
Core PCE Prices: 2.4%
Core minus Housing: 2.1%