Here are updates on Core CPI inflation and Shelter CPI inflation. Trends continue. Shelter inflation continues to increase above 3% YOY and Core minus Shelter inflation continues to move along at about 1% YOY. Some of the drop in energy prices might have filtered into core inflation, but we can see here that Core minus Shelter inflation was only at 1.35% when oil began to drop, and Core minus Shelter inflation hadn't been above that level since early 2013.
This week, expectations of a Fed rate hike have moved back from the December meeting toward the March meeting. That would be helpful, given that outside of the rent inflation caused by the housing supply depression inflation continues to be at a 50 year low.
Some of the developments that might lead to more housing supply may also lead to higher spending in general, so that positive developments in housing supply may be temporarily associated with both high home price appreciation and high rent inflation. I think that eventually, accommodative monetary, regulatory, or credit policies would each lead to declining rent and home price appreciation. But, the potential lag, and a general lack of appreciation of this problem will make policy and prices going forward an interesting show, with several possible paths.
In the meantime, considering the decade long depression-level behavior of housing starts, calls for monetary contraction because of inflation that is largely the product of rising rents are indefensible.