Rents rose by 0.4 percent from February to March — a slowdown from recent months even as gas and food costs spiked, according to the latest Consumer Price Index released Tuesday.

Rising gas prices in March were the chief culprit behind the largest recent monthly increase in consumer prices — a fact that came as a relief to financial markets expecting bigger hikes in the cost of shelter and other core items.

Consumer goods and service prices were 8.5 percent higher last month than they were at the same point the previous year, growing by 1.2 percent from February to March alone, according to the government’s Consumer Price Index. It was the largest annual increase in consumer prices since 1981.

After rising costs of shelter drove a big chunk of the inflation of the last 12 months, rent increases began to slow in March.

Owner’s equivalent rent — a proxy for homeownership costs — rose by 0.4 percent from February to March, roughly in line with the previous month’s increase. Renters also saw their housing costs rise by 0.4 percent, lower than each of the previous two months.

Stripping out the volatile categories of energy and food, consumer prices were up 6.5 percent year over year, and 0.3 percent from the previous month. That marks the lowest monthly core inflation rate in six months.

Investors appeared to greet the slowdown in core inflation with relief. The S&P 500, a stock index of the largest U.S. companies, was up by half a percentage point early Tuesday afternoon following the report’s release. 

Still, the fact remains that homeowners and renters alike were hit hard by ballooning expenses in March.

The spike in gas prices — which were 18 percent higher in March than they were in February — drove more than half of the monthly increases in consumer prices, according to the government’s numbers.

The cost of food at home rose 1.5 percent from February. Electricity costs went up 2.2 percent over the same time, while household furnishings and supplies rose by 1 percent.

But consumers may also be in for some relief on several key fronts. The price of used cars and trucks — which have skyrocketed over the last year — actually began to reverse in March, declining by 3.8 percent in that month alone.

Used vehicle prices haven’t fallen by that much in a single month since 1969, a sign of just how quickly they had been rising in the months before. Still, they remained 35 percent above their prices in March of 2021.

These inflation numbers are largely detached from the whims of the U.S. housing market, which has also undergone substantial price inflation over the past year.

Instead of using the rise in housing asset values, the government’s Consumer Price Index uses different measures to estimate the cost of the service homes provide — namely shelter. These costs are expressed as rents, or rent equivalents.

The cost of a renter’s primary residence rose by 4.4 percent over the last year, the fastest annual increase recorded since 2007.

The amount for which a homeowner could rent their primary increased by 4.5 percent in that same time, the fastest annual rate since 2002.

Email Daniel Houston

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