(ETH) – Fast-rising housing costs have helped to push inflation to a 13-year high. But the way that government statisticians track the price of consumer goods may be missing just how explosive home-price growth has been in recent months.
Housing costs rose by 0.4% between April and May, according to the latest edition of the monthly consumer price index released Thursday by the Bureau of Labor Statistics. Compared with last year, housing prices for renters and homeowners alike were up 2.2%.
Altogether, the rise in housing prices accounted for over a quarter of the overall increase in inflation in May, a reflection of how heavily government economists weight this spending category. But if that 2.2% figure seems off based on our own experience of buying or selling a home, it’s not a surprise.
Not everyone agrees on the rate of house-price growth. Other data suggested a much faster pace of home price appreciation and rental growth, well in excess of that level. The most recent report from the Case-Shiller Home Price Index for March showed that home prices were up more than 13%, the largest rate of growth since 2005.
So how does the CPI calculate housing? Firstly, housing units themselves have not included the CPI market basket. Secondly, rental data to establish how prices are changing are collected every six months. The calculations for most other CPI items are collected monthly or bimonthly. READ MORE