A Dodgy CPI Rent Reading for November – Reprise

Because the federal government was shut down in October the Bureau of Labor Statistics (BLS) did not conduct a survey of consumer prices that month but then reported two-month changes (for September-November) in prices with the following release of the Consumer Price Index (CPI). At the time I, in a commentary here (“A Dodgy CPI Rent Reading for November,” December 20, 2025), and others viewed the reported sharp two-month deceleration in the shelter component of the CPI with suspicion. Subsequent methodological clarifications from the BLS confirmed those concerns.

In October, for price levels not surveyed, the BLS assumed (unreported) changes of zero from September to October. In principle, with price levels then correctly measured in November, the two-month changes reported for September-November are correct. It is as if (implied) price increases in November include catch up effects, but with one important exception: rent.

The BLS stratifies its full panel of housing units into six subpanels that are surveyed in rotation. Each month the BLS assumes the monthly change in the shelter component of the CPI equals the sixth root of the six-month change in rent reported for the currently surveyed subpanel. Since a survey was not conducted during the shutdown, the BLS assumed that the rent for the subpanel that would have been surveyed in October was the same as in April when that subpanel was last surveyed. Because in October the six-month change in rent was thus assumed to be zero so, also, was the one-month change (i.e., the sixth root of zero).

But here’s the catch. For November, the monthly change in rent is the sixth root of the six-month change in rent reported from May to November for the NEXT subpanel in the rotation. Because that calculation was unaffected by the shutdown, the reported level of rent in November is correct but the implied monthly change in CPI-shelter does not include a catch-up effect. That won’t occur until April when the skipped subpanel is next surveyed. Meanwhile, the reported two-month change in shelter costs for November is too low by perhaps half.

To help clarify, I constructed this simple example. Suppose the level of rent increases steadily by 0.3% per month but, in October without a survey, BLS assumes the level of rent to be the same as last April. This is shown in the blue line in the chart. The monthly change in rent reported in the CPI is the sixth root of the six-month change in the blue line, shown as the maroon line in the chart. This drops to zero in October, the month of the missing survey, but doesn’t show a catch-up effect until this April.

Why does this matter? In November the two-month change in the CPI for shelter was 0.18% - or just 0.09% per month over September-November, and a sharp drop from monthly increases in the preceding months. Then, in December, the monthly increase jumped to 0.4%. One might be tempted to interpret December’s spurt as including the catch-up effect but, again, that won’t occur until April! Rather, the 0.4% increase should be considered fundamental and suggests that increases in shelter costs, and the contribution they make to increases in the overall CPI, are not slowing as quickly as suggested by November’s report, or as quickly as hoped for. And of course, one must also interpret with appropriate wariness April’s upcoming reading on shelter costs, which likely will be strong.